July 06, 2023
One day they are saying their first words, begging to be held, and telling you that you’re their best friend and suddenly, they are grown up, and preparing for college.
Time can easily get away from parents when they are busy with the day-to-day responsibilities of raising children. No matter what stage of parenting you are in, it’s important to start thinking and planning for college expenses.
Start Saving Early
It’s never too early to start saving for your child’s college education. If you can save as little as $20 a week from the time your children are born until they graduate from high school, you will save $27,000 at a 4% interest rate. If you can save $50 a week, you will save $68,000 over the same period. Even if you haven’t saved any money until your child is 7 years old, you would still save $40,991. Every dollar saved early will only decrease your child’s dependence on student loans, grants, or scholarships.
Investment Vehicles for College
There are several different avenues to invest/save for your child’s college tuition. A Coverdell Education Savings Account is a savings plan for parents that are looking to save before your child turns 18, with no account fees, and dividends compounded monthly. 529 Savings Plans are tax-advantaged savings accounts designed to encourage saving for tuition and related expenses. When you invest into a 529 Savings plan, you pay money into an investment account on behalf of a designated beneficiary.
Other options include Roth IRAs, Target date funds, and savings bonds. Depending on the age of your child and your short-term and long-term goals, one of these investment options could help you achieve the college savings that you need. Education First FCU has a team of representatives that will help you make sound financial decisions consistent with those goals.
Unprepared? You’re not alone!
You may be reading this and thinking that college is fast approaching, and you are not prepared for the costs that come with it. While this can be daunting, there are options for you! You can start by putting any amount of money in a savings account every week. You’ve heard the saying “some is better than none.” Just by putting $50 in an account every week, you could save $2,600 a year. While this amount of money won’t pay for your entire child’s tuition, it could give you enough of a head start to help fund their education as they go to school. If you have a specific amount that you would like to save, use our Goal Savings Calculator and start working towards your goal today.
Scholarships
Another avenue of getting money for college is tapping into funds that are set aside for tuition – scholarships. There are hundreds of scholarship opportunities out there that your child could apply for, and they don’t always have to be in the top 10% of their graduating class to qualify. Your child can apply for Education First FCU Scholarship starting on January 15 of each year. Education First has given away over $650,000 in scholarships to high school seniors since the program began in 1999.
Student Loans
Another option is applying for student loans. There are many student loan options for borrowers, and it’s important to do your research before making a decision. Education First FCU partners with College Avenue, a student loan option for students and their parents. It’s a simple application process with an instant credit decision. There are no application or origination fees, customized repayment options, and you have a choice of loan terms.
Direct PLUS Loans are federal loans that parents of dependent undergraduate students can use to help pay for college. This is a federal student loan option that is under the parent’s name, on behalf of the child.
We understand that student debt can be daunting, but if you plan accordingly, do your research, and have a long-term goal, the debt accrued can be an avenue to get your child where they want to be, without feeling a heavy burden once they enter the workforce after college.
Home Equity Loans
Do you own a home? If so, you could consider a Home Equity loan to help pay for your child’s school. This allows you to use the equity in your home to pay for college and other expenses. These loans offer low-interest rates, minimal fees, and a generous repayment schedule. There are repayment terms of up to 30 years, and no pre-payment penalties. Get started by applying for a home equity loan today.
Save while you wait
If money is running extremely thin, or you aren’t successful with the options listed above, your child may consider the non-traditional option of waiting a year or two to attend college. While transitioning from high school to college could be a smoother transition in terms of momentum, it may not be the best option for you or your child. Getting a part-time job, volunteering, and building a resume could prove to be extremely helpful in getting accepted into colleges and even provide more leverage once entering the workforce full-time. There is very little difference between a 22-year-old graduate and a 24-year-old graduate.
Community College
Community College is another option to consider. These colleges offer the same general education courses for a fraction of the price. If your child plans on finishing their degree at a state school or a larger university, make sure that all classes will transfer and be counted as credit. By splitting the classes between community college and a larger university, you could save thousands of dollars in tuition over the course of your child’s college career.
Tuition Installment Plans
Tuition installment plans are designed to help you manage college expenses by allowing you to pay in monthly installments, rather than every semester or quarter. The first payment will often be larger than the reoccurring payments. There are usually several ways to pay, such as by check or direct deposit. This monthly payment will not include expenses such as books, supplies, equipment, and transportation. Check with your child’s university to see if they offer this payment option.
College Student Budgeting
Before your child goes off to college, be sure to sit down with them and go over what it means to have a budget. There are three key factors in managing money and if they understand and master them before college, they will be in a much better financial position once they graduate college.
- Calculate Income
Whether your child is working full-time, part-time, or they must manage any amount of money that you allocate to them every month, they need to establish their monthly income.
- Budget out expenses
It’s very easy to go to college, feel a sense of freedom, and forget that mom and dad are not there to monitor them with their expenses. They need to write down their bills and expenses and budget out how much they can spend on entertainment, food, and other activities.
- Create a Savings Plan
Education First FCU has a great resource for budgeting. You can download our Monthly Budget Planner and help your child start a budget.
College Student Discounts and Savings!
You found a way to fund your child’s education and are now looking for ways to save money or cut back on expenses. College can get expensive when you factor in tuition, books, housing, and other costs. We’ll look at a couple of different ways that your child can save money while attending school.
Limit Eating Out
I know... it’s easier said than done. College kids are notorious for the late-night McDonald’s run, the $7 Coffee, and the chicken tender’s basket served at the local college hangout. If your child spends an average of $10 a day eating out, that’s a total of $300 a month! Think about how much money could have been used for tuition, books, or other necessities. We all know that the occasional coffee or fast food is going to be bought, but budgeting out these expenses is very important as to limit overspending. One way you can stay on track is by downloading a budgeting app on your phone. This will allow you to track expenses and stay within a targeted budget for food and other expenses.
Want to send your child off to school with more money savings tips? Download our ultimate college guide.
Save on textbooks
Textbooks are one of those necessary, but pricey, college expenses. Some textbooks can cost hundreds of dollars for one book. We’ll look at five ways to save on your college textbooks:
- Don’t shop at the college bookstore. These bookstores are convenient for the student, but you will pay high prices for their easy access.
- Shop Online bookstores, such as Amazon, AbeBooks, Chegg, and other online retailers. You can find a full list of the best places to buy college textbooks online.
- Buy used Textbooks. You can purchase a used textbook at a fraction of the cost of a new one.
- Buy or rent a digital version. Many textbooks are now available as e-books and tend to be much cheaper than the hard copy.
- Find groups that are used for the re-selling of student’s used textbooks. You or your child can ask around and see if there are Facebook groups that were created for this purpose or other avenues of acquiring used textbooks.
With a little planning, you can save a small fortune on textbooks alone while your child is enrolled in school.
You CAN do this
If attending a university is important to your child and receiving a degree will help them achieve their goals, then you CAN do this! You’ve heard the saying, “when there is a will, there is a way.” Your story may not look like your neighbor, brother, or friend, but however you get there won’t matter when you are set on a goal. It may take great sacrifice on you or your child’s part. You may have to get a second job, make sure that they take the time to apply for scholarships, and look for outside financing, but you can help your child reach their goals! Education First FCU is here to help you achieve those goals.
Check out our full list of resources:
Coverdell Education Savings Accounts (ESA)
Save Towards a Goal Calculator
