Whether you have a young child and want to come up with a plan as soon as possible or a teenager for whom college is right around the corner, figuring out how to pay for your kid's education can be an overwhelming task. And with tuition costs steadily rising and federal aid becoming increasingly difficult to acquire, paying for college is a concern that's not likely to go away any time soon. Read on to find out our top tips for making dollars and cents out of it all.
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FAFSA: Whether you think that you will qualify for need-based assistance or not, you should fill out a FAFSA application for federal student aid. Financial aid formulas are very complicated and the only way to know for sure whether there is anything available to you is to let the experts handle it. Plus, some schools require the FAFSA be filled out in order to work up an aid offer, whether it will include federal aid or not.
Merit: We all know it pays to be smart. It pays the most when you combine your child's impressive books smarts with some clever thinking. The Ivies may be the gold standard, but chances are somebody's going to spend a lifetime paying off an education from one. Turn the tables by focusing on highly-rated public schools and applying to as many of them as possible. These schools want to recruit the best students, so if they know you've got a smarty who is in demand, they'll be willing to bust out the financial big guns.
Work-study: Many students take for granted that their parents will take care of their college expenses, but you should nip that thinking in the bud from an early age. You do not have to shoulder the burden on your own, even if you want to. Even kids with no work experience can get a job through work-study programs offered by their schools that will pay them money to use toward school expenses. Of course, an independent part-time job is always an option too.
Benefactors: Look into service programs that will help you and your child pay for school. Organizations like the ROTC and PeaceCorps offer financial assistance in return for service committments, most of which will only serve to further enrich your child's young-adult experience.
Tax breaks: Make sure that after their very first semester and every semester afterwards, you are claiming any and all education credits that you are eligible for. The major ones are the American Opportunity Tax Credit and the Lifetime Learning Credit. Make sure you know what they are and if they apply to your situation.
Accelerated learning: It's not easy to earn a Bachelor's degree in four years, let alone even less time, but with some planning and dedication it is possible, and it's one of the best ways to cut costs, especially for a student who plans to live on campus. High school students can take core classes at community colleges over multiple summers, at lower rates than what you would spend at a university. Make sure your student takes every placement his chosen university offers, as another way to speed up his degree is to place out of some of the prerequisite classes.
AP: Encourage your child to take advanced placement courses from early on in her high school career and if you can afford it, take the test for each of them. Depending on the university, students who score 4s or 5s on these exams can be offered college credits for them. Paying for the tests, is a lot cheaper than paying hundreds of dollars per credit.
Save smart: Think about investing in a 529 plan. These college savings programs vary by state, and there are several types available, including one that a number of private institutions particpate in. You can either open a 529 savings account which acts similarly to a 401(k) or IRA in which the funds deposited grow based on investment elections, or a 529 pre-paid plan, which allows you to pre-pay for tuition and associated fees at the current rates. You can open a 529 account at any time, so it's a great option for parents who have kids of any age. There are also associated tax benefits.
Take out a loan: For most people, a loan is the least favorable option, but if it's your last option, make sure you know exactly what types of loans are available to you and how they compare to each other. Though they are no longer the easiest to get, federally subsidized loans for parents of college students do still exist through the PLUS program, and should be seriously considered as they offer lower rates than many traditional loans.
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