Do you have children or grandchildren? If you do, you are likely considering their higher education opportunities long before they have similar thoughts of their own. If trends are any indicator, the cost of four year and two year universities continue to rise every year. As the cost of college increases, planning and investing in your child’s future now becomes even more important.
1. Take Advantage of Merit Based Scholarships
Some families don’t fill out the Free Application for Federal Student Aid because they believe their income is too high for their child to qualify. No matter your income, it is worth filling out. Most colleges offer aid based on high school academic achievements (merit). If you don’t fill out the form, you cannot be considered for those scholarships. You can apply by visiting https://fafsa.ed.gov and clicking “Start A New FAFSA.”
2. Choose an Investment Program
A 529 college savings plan is named after Section 529 of the Internal Revenue Code. This type of plan allows you to steadily grow a designated account that is designated for college tuition and other college costs. As long as the money is used appropriately, the state-sponsored investment plan gets special tax benefits. The money invested in a 529 grows tax free and is also tax free to spend on college expenses such as tuition, books, and fees. Even if you aren’t certain that your child will attend college, it’s still a good investment because you can change the recipient of the money. A grandchild, sibling, nephew, niece, or even you can use that money for education. In some states, the money in a mature 529 account can even be withdrawn for uses other than college.
3. Enroll in Rewards Programs
Some credit cards offer a percentage back when you shop and buy gas. If you swipe a card when you dine out, a using a card with a rewards program would give you some of that money back monthly or quarterly. Although these programs typically award a very small percentage of the purchase, this money can be invested into a designated college savings account or a 529 plan. When the new graduate in your life is ready to begin their higher education, you’ll be thankful for every penny saved.
4. Ask for College Fund Contributions Instead of Socks
Tired of birthday gifts or holiday gift that seem unnecessary? Instead of asking friends and family to buy your child toys, ask them to contribute to a college tuition savings account. Many states offer tax deductions for financing a college account, even if the child is not your own.
Plan Ahead
While it may be unrealistic to work one’s way through college like in decades past, all hope is not lost. Like all investment strategies, your biggest ally is time. With the right strategy and an early start, a debt free education really is possible.
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