College can be an expensive investment, but most people agree that it’s a price worth paying. After you’ve financed your own education, you may struggle to pay off your student loan debt. Fortunately, there are many Payment Plans available to help you. If you’re now a parent, it may be very important to you that your child isn’t stuck with a similar burden. There are things you can do now to set them up for success in the future.
The most important thing you can do as a parent to give your child a leg up is to save money for their college tuition. It’s never too early to start. Even if your child is just a baby, set up automatic withdrawals each month, even if it’s not much. You’ll get in the habit of saving, and the amount will grow over the years. One of the safest and most beneficial ways to save is to invest in a 529 College Savings Account. Contributions are tax-deferred, meaning they can be taken from your paycheck pre-tax. When it comes time for college, the distributions are also tax-free, as long as the money is used for education expenses. Having more in savings means your student will need to borrow less in student loans. You’ll also decrease the chances that you’ll need to take out a high interest rate PLUS loan.
If you discover your child is gifted in sports, music, or art, investing in these lessons could not only make their childhood more fun, but the investment of time and money could pay off in the form of Scholarships. You never know what type of scholarships could be available for your child once they get to college. Although it may be unpleasant to think about, having a good life insurance policy is important. In the event of your death, you can ensure that your child is set financially for their childhood as well as college education.
Prepping for College
When it comes time to research colleges, help your student make a wise choice. Consider a local community college or public university, but don’t rule out a private college. Each school will offer a unique financial aid package, and the expensive university could actually result in less out of pocket cost, due to university-specific financial assistance.
It’s also important to help your student have realistic financial expectations. You may not be in a position to cover 100% (or any) of their tuition, so they’ll need to be prepared to contribute. Help them navigate the FAFSA and to be wise about taking out only the student loans they absolutely need to cover their educational expenses.
Enjoy the Time
If you’re unable to save for your child’s education, don’t worry too much. The federal government is always looking for ways to revise their financial aid programs, including student loans and repayment plans. Take the time to enjoy your child and instill in them the value of pursuing higher education, and they will have a bright future ahead of them.