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The last thing any parents wants their children to experience is entering their adult life with a crippling amount of student debt. Therefore, it’s essential to learn practical and dependable ways to save for college. The trick is to begin planning as soon as possible. In doing so, you can help your children trim down and eliminate a significant amount of their student debt. Here are three ways to save for your kids’ college costs.
Even though scholarships may not cover your child’s entire student debt, they will help decrease it significantly. It isn’t uncommon for the average four-year non-profit college or university to cost up to $50,000 after tuition, room, board, out-state-fees, and other fees are factored in. If your child plans on attending a community college, those fees could add up to $30,000 annually. When students apply for as many scholarships and grants as possible, it will help trim that debt down considerably. Students can apply based on merit, financial need, sports achievements, community service, and more.
Should you start saving for college as soon as your child is born? Yes, that’s a good time to start. What if you don’t start saving until your child is in high school? That’s also a good time to start. What does this mean? It doesn’t matter when you start putting money away as long as you have savings set away with a good plan. The plan that comes most highly recommended is the 529 plan because, in addition to having tax advantages and state sponsorship, as well as with institutions, and agencies. Some financial planners also suggest that parents stash away savings for their children’s college education in their Roth IRA.
When your child starts working a part-time job as soon as they are old enough to do so, they can start putting away money into a custodial savings account. Then, when they go to college, they can continue with that habit of working a part-time job and make payments toward their student debt. They can also use what they saved during the years prior toward books, supplies, and other materials to eliminate that portion of their student debt. As they continue through their studies, your child can move on to participating in work-study programs or paid internships that can also contribute to their tuition costs.
Planning and budgeting are your best recourse regarding saving for your child’s college education. Working diligently toward this goal and keeping it on your radar must remain a priority if you want to help them reduce their student debt. Although refinancing their student loans will always be an option to explore later, it’s better to decrease their total debt from the get-go. Involve them in the process as soon as possible to help them understand the expense, as well as participate in the savings process.