As a parent, you want only the best for your kids, which includes a college education. While they are likely stressing about SAT scores and college essays, you have to worry about finding the money to send them off to college. Today’s cost of higher education can be a financial drain on even the best-off families. The key is to start your financial planning for college early so when the time comes with these college financial planning tips, you will be prepared.
The following tips will help you plan for your kid’s college costs, without having to spend the rest of your life making payments. Getting college financial planning tips from a reputable professional like Robbert Yancovitch montreal can help a parent get on the right track.529 College Savings Plan or a Coverdell? Which is right for you?Click To Tweet
College Financial Planning Tips for Parents
Negotiate Through Financial Aid
Once your child is accepted to college, they will likely begin to receive financial aid information. These packets are an essential part of a successful college financial plan. Schools will vary greatly in what the offer in regard to making up the difference between what you will contribute and what the actual fees are.
This amount will be calculated based on several factors: the aid that is currently available at that school; your child’s achievements; and your overall financial need. This is the calculation that often presents the biggest challenge for middle-income families, since these individuals usually make too much to qualify, but too little to pay out-of-pocket.
Take back control of your finances!
Get a FREE checklist for the money moves to make in the New Year.
Also get new articles, advice, and tips delivered right in your email inbox with our newsletter!
There is no need to panic when you receive these packets and you should not base all of your planning on what is inside of them. These are not the end-all when it comes to paying for college. The majority of families college financial planning tips will involve a plethora of options including grants and loans.
If your child has been accepted by several schools you will also have negotiation powers by mentioning what other schools are offering to get a better option.
Consider the PROFILE Alternative
The financial aid application, which is referred to as PROFILE, is offered by The College Board, which is a nonprofit membership association that helps to connect kids and colleges. They currently serve over 500 colleges and more than seven million students. They offer an online application, making the process even more streamlined for parents and students.
If your child plans to apply to one of the schools or the scholarship programs that are currently accepting the PROFILE application, registration is only five dollars with a charge of $18 for every scholarship or school you apply to. This is extremely affordable when you consider the aid that you may be eligible to receive.
Utilize the 529 College Savings Plans
This is a program offered in all 50 states and is a popular option for parent’s college financial planning tips and methods. You simply open an account, choose your preferred investment strategy and then accumulate tax free earnings. The withdrawals that are made for room, board and tuition as well as books will also be tax free.
You should shop carefully when you are selecting your investment strategy and invest in an aggressive manner early on and then more conservatively as your child nears graduation from high school. You can also extend the 529 College Saving Plan to family and friends, which will allow them to contribute to your child’s college funds. Getting all of the information on this type of savings plan can be easy when dealing with a professional.
Consider the 529 Prepaid Tuition Plan
This is a consideration that needs to be given careful thought. This plan allows you to pay today’s tuition prices for your child when you desire, no matter what the future cost is. Theoretically this means that you can pay for your child’s college education before they are even out of elementary school at the rates offered today, rather than 10 years down the road.
There are a number of states that now offer this type of plan. You have to keep in mind, this prepaid tuition will only be able to be used at in state colleges or universities. If your child decides to go to an out-of-state or private school, you will be faced with a number of penalties.
Benefits Of A Coverdell Education Savings Account
This is the new name for the education IRA for those planning for college, and the
Coverdell Education Savings Account that is offered today has much better benefits. Parents set up these accounts and the child is named the beneficiary. The contributions to this are not tax deductible, but any earnings are tax free, as well as any withdrawals for school related costs.
The most appealing changes in this plan are the fact that you are now able to contribute up to $2,000 each year instead of only $500 plus friends and family can make contributions up to $2,000 each year. Another change is the fact that Coverdell investments are now able to be combined with other types of education related tax breaks to cover more education expenses than what were covered previously.
When you utilize education bonds, they provide much more control over the college planning investments you make. The federal Education Bond Program includes a number of investments such as Series 1 bonds and EE bonds.
You are also able to purchase these bonds in amounts that range from $50 up to $10,000. While they do not offer large or substantial returns, they are a way to ensure your college planning efforts maintain safe.
Federal Aid Options
You need to research the available federal aid that is available by filling out the FAFSA form in order to determine if your child will qualify for any loans or grants. This application will determine if you can qualify or a number of grants, such as the Pell and Federal Supplemental Education Opportunity Grants, as well as federal work-study programs, Stafford loans, Perkins loans and even the Parent Loan.
When you begin to embark on a journey to save for your child’s future, you need to always be aware of fraudulent offers. Any offer of money back for scholarships or that states you are going to receive money for something you have never applied to should be avoided. Careful college financial planning can ensure that your child’s future is secure and that you do not have to stress how you will pay for their higher education.