As summer starts to wind down, the usual onslaught of back-to-school marketing is in full swing. And for many parents, this may lead to nervous stomachs from worry that they didn’t do enough to provide for their kids’ educations. Even if you got a late start putting money away, there are a few things to consider before the first day of college.
Two Plus Two
Post-secondary education is always a bit of a gamble. It’s not high school, and the culture shock can derail many students. Consider starting your scholar in a local community college for the first year or two of their four-year degree. Tuition is often more affordable and living at home as they adjust to the new educational environment keeps residence costs down. Be sure, though, that credits from the local college transfer to the senior school.
Here’s some more simple math. If you’re late to the education savings game, the interest on short-term investments is going to be low, maybe 1 or 2%. Yet, tuition historically inflates at around 5%. When you have the option to pre-pay tuition, you have a chance to save not only out-of-pocket dollars, some states have tax deductions or tax credits for this amount as well. The net effect for you could equal the value of high interest savings on the same initial investment.
The Cheering Section
Grandparents and other relatives are often eager to support your child’s post-secondary endeavors. When they help out financially, don’t forget Section 529 accounts. Many states that offer deductions for funding education accounts allow deductions for children other than your own, so it’s an incentive for older relatives looking to both help out and score tax breaks.
Make a Promise
Upromise, GoalSaver accounts through Sallie Mae Bank work like a cash-back rewards program, with the rewards directed toward your child’s higher learning. It’s a free program and you can send out invites to friends and family, so they can help out even when they can’t make cash contributions. Once it’s set up, the rewards accumulate.
Don’t forget traditional ways to lower the costs of education, such as scholarships and bursaries. Get your child involved in the hunt too, since it ultimately benefits them, and one day, they’ll be doing the same for your grandchildren.