Moms want to help their kids succeed, and part of that may include attending college. However, no matter your child’s age, planning for college often comes with questions, including the uncertainty of the cost of tuition by the time they are ready to further their education.
What if You Start Saving Late?
Even if you don’t feel like you have much time remaining until your child will attend school, saving late is better than not saving at all. You might ask family or friends to give gifts of money instead of gifts for holidays and birthdays. You might have your child go to a community college first, as these can be less expensive. Then they can transfer over to a four-year school so they get their degree from the bigger school.
You may want to look for ways of reducing your monthly spending so you free up more money for the college fund. You might decide to do something fun at home instead of going out to eat or seeing a movie.
Another way to cut your monthly spending is by refinancing your student loans to a new one. When you refinance student loans with Earnest, your monthly payments may shrink, allowing you to put more money into your child’s saving fund.
How Much Should You Save?
This is perhaps one of the biggest questions when it comes to college savings. Several factors will influence the cost of tuition, including whether your child goes to a public or private school, the amount of time you have to save, and any special programs. If you are starting early, know the costs will probably be higher when your child is ready to attend college.
What if You Can’t Save Enough?
There are lots of ways of covering the cost of school for your child, even if you can’t save as much as you had wanted to. You may encourage your child to get a job, look for scholarships, apply for grants, and take out loans. Now is a good time to have your child meet with a guidance counselor about the different options for paying. Schools’ financial aid offices may have helpful resources about covering the cost of tuition.
Should You Use a 529 Education Plan?
Sometimes the effects of stress can creep into your finances so for some mom’s, a concrete and long-term plan helps combat that. This type of savings vehicle is a special account that comes with certain tax benefits to help you save for school. There are usually a few types of investments, and the funds may grow on a tax-free basis. If the withdrawals are used for certain types of educational expenses, they may be tax-free as well.
However, if you do not use the money for higher educational expenses, you may need to pay federal and state income taxes, as well as an extra federal tax. Depending on your state, there may be tax deductions for contributions you make to plans in your state, so do your research before you pick a plan. Just know that with other types of investments, the accounts can lose money as well.
