Your child might not be ready to leave the nest. But it’s never too early to start thinking about the cost of college. As if a college education wasn’t expensive enough already, news headlines show that this cost is rising each year. That’s why you need to start coming up with a payment plan now.
Financially savvy parents will start saving for college fees sooner rather than later. Here are five realistic tips that can help if you’re thinking about how to finance your child’s higher education.
Start saving early with a 529 college savings plan
A 529 is a college savings strategy that’s essentially designed to help you pay for education. Other than college, you can also use the plan to save for K-12 tuition costs. There are two types of 529 plans.
529 prepaid plan
The prepaid tuition plan allows the owner of the account to pay advance tuition at certain universities and colleges. This means you can lock in the costs using today’s rates. A 529 prepaid plan is an effective method of taking care of inflation.
529 savings plan
The 529 savings plans allow you to save and pay tax later. All withdrawals under this plan are free if used for qualified education expenses.
To get a savings plan that’s suitable for you, do some research about the advantages and disadvantages of each plan. You can also seek college savings advice from college advisors such as CollegeData.
Apply for school-sponsored scholarships and tuition waivers
There are many school-sponsored scholarships available that can help you finance your child’s education. The scholarships can be an award or a grant for hobbies, special skills, or specific fields of study. The application process for some scholarships is straightforward, while others may have additional requirements such as essay writing. Make sure you understand the requirements of each individual scholarship.
The potential benefits of scholarships are enormous, and they come with few or no strings attached. If you don’t get a full scholarship, don’t worry. Even partial scholarships go in a long way in saving you some tuition fees.
You can also do research about tuition-free institutions that your child can attend. Several colleges have a free tuition plan for admitted students, but they usually require on-campus work.
Hunt for every third-party scholarship you qualify for
Third-party scholarships are a useful source of funding that can help you cover expenses related to education. Many national, local, or regional organizations are willing to provide grants or scholarships to qualifying students who are pursuing their undergraduate degrees.
The scholarships or grants can be tailored to your GPA, special skills, or interest in sports. Guide your child to apply for all the scholarships they qualify for to increase the chances of getting one. Before issuing scholarships and grants, organizations usually do thorough research and background checks to establish the authenticity of the person applying. These checks show whether the person has met the requirements needed for the scholarship.
Check eligibility for government grants
The government offers students grants through a very competitive process. Grants are usually provided to students from very low-income families who have shown academic prowess and are multi-talented. Unlike student loans, grants often do not need to be repaid.
Regularly check the government requirements to find out if your child meets the eligibility criteria for government grants. If so, don’t hesitate to apply. You can apply for all available grants if you meet the eligibility criteria.
Use federal student loans to cover the rest
The federal government issues a federal student loan. Many people like using federal loans to finance higher education because federal loans come with more benefits compared to private students’ loans. Some of the major benefits of federal students’ loans include fixed interest rates, loan cancellation for some type of employment, and the fact that interest rates can be reduced (depending on the repayment method). Unlike private loans, federal student loans don’t ask for a credit check before issuing loans.
Don’t wait until your child is ready to go to college to sit down with the checkbook. Make a plan now to finance your child’s education. Find a plan that works for you to start thinking toward higher education today.