Tuition can be one of the biggest purchases of your life.

With ever-rising college and university rates, it should come as no surprise that parents all over the USA are struggling to save for their child’s future. If you’re a parent who feels this strain, continue reading the article below where we’ve outlined three crucial financial tips that will help you pay for your child’s college tuition.

1. 529 College Savings Plans

Many parents turn to 529 savings plans as a way to pay for higher education. That’s because these plans are tax-advantaged and specifically designed to cover tuition costs. In addition to post-secondary costs, these plans can also be used to cover the cost of k-12 education and apprenticeships. And, as of 2019, these plans can be used for student loan repayment and Roth IRA contributions.

Before starting a 529 plan, it is important to know that there are two main types. The first type is education savings plans. Education savings plans offer tax-deferred growth and tax-free withdrawals when used for qualifying education expenses. Parents should be aware that these types of plans typically remain under the control of the donor, who is usually the parent, so there is no need to worry that the funds will be misused.

The second type of 529 college plan are prepaid tuition plan. This is where the account owners can lock in current tuition rates for future attendance. Although beneficial to lock in a set rate, it may limit schooling options as the money in this type of account is not guaranteed by the federal government or some states.

Finally, when it comes to prepaid tuition accounts, parents need to know that they do not cover the cost of room and board, so if you will need to account for that in the future you may be paying out of pocket.

2. Federal Financial Aid

All U.S. citizens and permanent residents can apply for unsubsidized federal student loans. Although this is not ideal for a young student to be taking on. That’s why, parents looking to help their children may want to apply for something similar with an FAFSA (the federal parent loan) so long as their child is enrolled part-time.

For those who qualify for a loan, the federal government will pay interest on the loan while the student is in school and for 6 months following graduation.

3. Grants and Scholarships

Parents should also look into as many grants and scholarships as possible. Not only are grants and scholarships offered by universities but many companies and institutions are willing to invest in a student’s future.

Typically, those who offer a grant or loan to students set out specific criteria that need to be met based on a few key factors like grades, economic circumstances, and athletic or extracurricular participation. However, this criterion should not deter students from looking into them and applying as many programs simply ask students to submit their interest by writing an essay outlining why they need the financial aid and what it will be used for.

So, although this process may be tedious, the time-consuming task could pay off greatly. Students and parents are also encouraged to look into options on websites like Fastweb to the College Board’s Big Future which update regularly with new opportunities.

Ultimately, paying for your child’s college tuition requires careful planning and preparation. By starting early, setting realistic savings goals and exploring financial aid options, you can alleviate some of the financial stress. For more information on how you can maximize your savings consider calling us at 407-328-5001.


Image: Unsplash