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Saving for College
The MMI Online Articles are designed to inform, assist, educate and alert consumers.
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As fast as children grow, so does the cost to educate them—more than tripling in the past 20 years. In fact, experts predict that 18 years from now the cost of a public college education will be more than $100,000, and a private college could cost twice that. Whether you have 18 years to prepare or your son or daughter is packing right now, you’ll have to decide how to foot the bill.
The most common way to finance an education is with a student loan. While most student loans do offer attractive repayment options, many students are dismayed when they are still paying for their education 5, 10 or even 20 years after graduation. If this is a situation you and your college-bound child would like to avoid, there is good news. Opportunities for funding your child’s education are diverse as the career paths they afford.
-Private scholarships. There are thousands of private scholarships awarded every year that fall outside of the university’s domain. Private scholarships are not limited to students with perfect grades and packed resumes. Artistic talent, creative writing skills, lineage, interest in a particular field of study or being a member of an underrepresented group can all help you secure a private scholarship. However deadlines can be as early as July, more than a full-year before the student plans to enter college.
-Section 529 plans. Section 529 plans are state-sponsored college savings programs. The two major types are Prepaid Tuition Plans, which lock in current tuition rates, and State College Savings Plans, which offer more flexible investing options. Both are useful ways for families to save for their children's college education.
-College controlled aid. Your individual college may be able to offer a short-term installment plan that splits your tuition into equal monthly payments. Many schools also offer their own merit scholarships.
-Military Aid. The U.S. Armed Forces offer several programs to provide students with money for school. The most well know is the Montgomery G.I. Bill that provides a cash education incentive to encourage you to join and serve a tour of duty.
Finally, don’t forget to enlist the student’s help; money earned from a part-time job can cover incidentals, such as books. Keep an open line of communication with your child; they will not be learning about personal finance at college.
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