Financing your child’s college education is something that every parent thinks about from time to time, and as the child nears college age, the parent thinks about it even more. How do you plan to finance your child’s education? There are many ways.
First, where does your child want to go to college? If your child wants to go to a local school, or a state school that will cost you much less than going to a private college or university. In state tuition is usually reasonable and if your child will attend school in the town you live in, he or she can live at home and save on dormitory expenses. It is also possible that your child could attend a community college the first two years and really decrease the amount of money you spend. If your child has been an A student in high school, many states offer free tuition at the local community college. They call the program Bright Flight and it is designed to make sure that bright students get a good start. Some private universities have similar programs because they want the best students to come to their schools.
Next, does your child qualify for scholarships? There are many types of scholarships available and not all of them are based on grades. Some are sports based and require playing a sport your child may be good at. Some are for descendents of veterans, some for people interested in certain vocations, and others for people who live in certain areas. Also government grants and student loans are available for many students. A grant is free money that does not have to be paid back. A loan does have to be paid back, but generally not until after a person graduates and at a low interest rate. Student loans are also available for graduate school if your child decides to get a masters degree later.
Many parents though want to save as much money as possible to make it easier to send their child to the college they choose. To accomplish this, the earlier start you get the better. Putting some money away every month will go a long way towards building a college fund nest egg when the time comes. Often this money can be tax deferred by putting it into an education IRA. An education IRA works the same way a retirement IRA works, but is used for educational expenses. Also many states now have pre pay plans. In some states a parent can pay a set fee every month while a child is young, until the amount of four years of tuition at today’s rates is reached. Then no matter what the cost of tuition is when the child reaches college age, the cost of tuition is already prepaid at whatever state school the child qualifies to go to. This is a method of saving for college than many people are going to these days. It provides future security at a lower price than expected.