When parents are asked how they plan to pay for their kid’s college education, many of them break out in a cold sweat. And rightly so, as tuition and room and board have increased significantly over the past decade. It’s not uncommon now for tuition at a private school to range from $25,000 a year to $50,000—or more!
Public universities or community colleges are less expensive, but their costs have also climbed over the previous decades.
Even with financial aid, many students are taking out a crippling amount of debt, something that will likely shadow them for many years—or decades—after college. These debt loads make it challenging to buy a house, purchase a car or even follow a specific career path, especially if it’s in ministry or the arts—where incomes tend to lag behind those in other fields.
Considering these challenges, there are few things you can do now to help your son or daughter navigate the college debt minefield.
1. Start saving now! If your child has one year to go until college or 10, start saving now. Obviously the more the better; but even if it’s only a small amount, it will help ease the burden of room and board, a semester of tuition or books.
The important thing to remember is consistency. It’s relatively easy to start a savings program, but its long-term success will be measured by how long you keep at it. Set a reachable but challenging goal, and work at making that commitment each week, paycheck or month.
2. Encourage your kid(s) to get a job. With after-school sports and activities, it can sometimes be a challenge—but the long-term benefits of having a job will serve your kids well.
Once they get a job—whether it’s a summer job or one that runs throughout the year—encourage them to save a good portion of each paycheck for college. Learning to save is a wonderful habit to develop early.
You can even create a spreadsheet where you outline the estimated costs of each semester and how their earnings are beginning to pay for these expenses. Once you start to see the costs of a semester being covered by savings, it will be exciting to see how much they can achieve before leaving for college.
3. Check out a 529 plan. According to the SEC, this a “a tax-advantaged savings plan designed to encourage saving for future college costs. 529 plans, legally known as ‘qualified tuition plans,’ are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code.”
Each state offers this plan, so look into what your state offers. However, you don’t necessarily have to use your own state’s plan.
Regardless, the plans are great ways to encourage saving.
4. Be vigilant about scholarships, even though they may not be keeping pace with tuition increases.
According to the Washington Post: “Simply put, scholarship aid is not keeping pace with the rising price of college. While half of all families use a scholarship of some type to pay for college, much of that money is coming in the form of ‘discounts’ off the tuition bill. Tuition discounts grew from $30 billion in 2007 to more than $50 billion in 2015, according to the College Board.”
Devoting time and energy to finding all the scholarship and tuition discount opportunities available to you is worth the effort. $500 here. $1,000 there. $2,000 over there. It all adds up.
5. Be creative. Put your heads together and develop two or three “out of the box” ideas to raise money. There are numerous platforms today that weren’t there 20-30 years ago. Develop an idea, implement it well and see where it takes you.
Make sure to pray about these opportunities and see if God leads you in a certain direction!
College costs probably won’t come down any time soon. We need to be proactive and determine how to pay for them without severely hampering future economic outlooks. If you can, start early, be consistent and be open to creative ideas!
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