Financing your child’s education is likely the single largest expense as parent. Numerous families find themselves unsure about the best way to pay for postsecondary education costs. With the growing popularity (and necessity) of a college education, costs have continued to rise but financing options have also increased.
It is no surprise that the best plan to finance your child’s education is to start saving early; the earlier the better. By getting started early, you can ensure that you have the opportunity to take advantage of the best financial saving plans available. Some of the best educational saving plans to choose from include the 529 Plan, GET Program and the Coverdell Education Savings Account. Aside from these plans which are specifically set up to save for educational expenses, there are traditional savings accounts and investment opportunities available that will accrue interest – these traditional saving opportunities may not have the same tax benefits that the educational saving programs are likely to have.
But, what if you are starting late? Many families find themselves behind on saving for their child’s college expenses; more pressing life expenditures start to take precedent and life moves much faster than expected. Unless you plan on winning the lottery, it is unlikely that coming up with the full amount of tuition, living expenses and books is a feasible option. Depending on how late you are starting, it may be time to look at other financial options.
Scholarships and Grants would be the most ideal mode of payment for some or all of college tuition and living expenses. If your child is a star athlete or scholar, then a scholarship is most likely already in the works; if they are not, however, there are still scholarships and grants to be had. Start by researching various grants and their eligibility – many are based on financial standing, ethnic backgrounds or disabilities. Scholarships are generally awarded in exchange for scholar achievement, community involvement, educational programs and through competitions. Local businesses and corporations are also very likely to have scholarship opportunities worked into their enrichment or community involvement programs. Neither a grant nor scholarship will be awarded without applying for them, so encourage your child to find and apply for as many as possible.
Financial aid has become the most common way to finance an education. Student and parent loans are applied for annually and awarded semesterly. The first step in applying for financial aid is filling at a Free Application for Federal Student Aid (FASFA). Depending on the financial strength of the individual and family, the U.S. Department of Education will decide on how much will be awarded to the student or family as financial aid. The amount may be only a percentage of tuition cost but it may also be enough to cover cost of tuition plus other expenses. If a government grant is not awarded then a loan amount will be. The student or family has an option of how much of the loan to accept; all loans and their interest must be paid back once the student is no longer enrolled as a student.
Financing an education is expensive no matter the method of payment; it is extremely important to invest time to plan. Research the tax incentives, interest rates, benefits and disadvantages of each option before one is decided upon and pursued. A college education has become an essential component in career preparation so be sure take full advantage of everything offered to assist in financing your child’s education.
Robby Monk is an online marketer for BatesCarter. BatesCarter is a full service accounting firm that provides accounting in Atlanta, North Georgia and the surrounding area. For more information, please visit BatesCarter at http://www.batescarter.com.