Whether they’re 2 or 12, it’s never too early to start thinking about your child’s or grandchild’s college fund. In fact, with inflation rates at an almost all-time high, it’s imperative to have a financial strategy in place, so you can offset the rising cost later.
As you’re applying, check out these step-by-step guides on writing beautiful college essays and putting together an awesome college application:
- How to Build a Balanced College List for Counselors
- How to Write a Personal Statement
- How to Write the College Apps & Supplements
- How to Tackle Your Supplemental Essay
In this article, we’ll be giving you a few smart ways to help you pay for your child’s or grandchild’s college education.
Help Them Take Out a Private Student Loan
One of the most common methods people do to pay for college is to take out a student loan. A student loan is what pays for the tuition of a person’s college degree.
However, that’s not all the loan can be used for. It can be used for all sorts of things relating to education such as supplies, equipment, a new computer and even room and board.
But something you don’t want your child to deal with is astronomically high-interest rates. Interest rates are fees that are calculated by a certain percentage of the original amount.
Traditional lenders these days can have absurd rates, especially when inflation is currently on the rise. In fact, it’s the interest rates that can make paying back the loan very difficult.
Fortunately, there is another way to take out a student loan and not have to deal with this problem. There are Earnest private student loans available to offer more favorable rates than a bank or lender typically does, so your child will be able to focus more on their education without the worry of payments until after graduation.
Open a 529 Savings Plan
A 529 savings plan is a type of investment people use as a way to get tax benefits while simultaneously paying for college for a beneficiary. It works similarly to a Roth 401k or retirement fund.
There are two types of 529 plans: individual and custodial. Individual 529 plans are where the owner saves money for the beneficiary, which is typically parent and child.
Custodial plans work a little differently. Instead of an owner paying for a separate beneficiary, the student acts as both. These plans give plenty of benefits such as tax benefits, high flexibility and they’re very low maintenance.
Dip into Your Retirement Funds
While it should be noted the above options are much better, there’s nothing wrong with you dipping into your retirement fund to help your child pay for college. However, it’s best if you know how much you should have saved for retirement at this stage and make sure you’re not going to run into any financial issues in the future.
College is very expensive, especially when you pay for it out of pocket. Even if you’re only sparing a couple thousand, people in retirement typically don’t have an income stream. So, unless you have some way to make the money back, you need to really think this one through.
Help Them Apply for a Scholarship
Probably the best way to pay for college is to not pay at all. Scholarships are government-regulated financial awards for students with a solid academic background. However, they’re not exactly exclusive to these people.
Anyone these days can get a scholarship by applying for one online.
- Preparing Your Kids For College? Consider These Professions For Them
- 5 Tips for Sending Your Child to College Successfully
- 5 Things Parents Should Do to Help Their Kids Get into College
- 6 Strategies for Improving Your High Schooler’s College Admission Chances
- The Top Tips to Get Great College Recommendation Letters