The increasing costs of higher education are a part of our current reality as the average total price for a 4-year degree is approximately $122,000.
While the future may seem overwhelming, there are several ways to reduce college costs that you can begin now. Plus, turning good savings behaviors into long-lasting habits can be the ticket to a fruitful and (hopefully) debt-free future.
1. Start Saving as Soon as Possible
Much like retirement savings, the earlier you start putting money away for college, the more opportunity your accounts will have to grow. Begin by opening a 529 plan or purchasing savings bonds when your child is an infant, if possible. But, even if you missed that milestone, starting a 529 plan now will still benefit everyone in the future.
If you have a student in high school, encourage them to put away even small amounts of money. They can deposit it into their Club Ignite account or consider a secondary savings account or even open CD or money market account to build up interest on current savings. Doing this can reduce college costs and decrease the number of loans that they need to take out.
2. Do Your Research
Consider what type of institution your child may attend (Private or State University, Tech College, etc.) This will help you figure out how much you should save. If your child has a school in mind, research today’s tuition costs and the rate of inflation. This will give you an idea of what you’ll pay when they begin school. Find out what their funding and financing options are.
If they already have a major chosen, do some digging into what credentials are needed in their major’s industry down the road and consider their options for getting the most bang for your buck.
If your child is not sure what they want to be when they grow up, that’s ok! Look into community colleges as a starting point. These lower tuition schools offer a wide variety of courses to give them options and time to define their studies’ direction and help reduce college costs!
3. Save on Room & Board
Sometimes, there is no place like home. Talk with your child on what living expenses entail: a room to sleep in, furniture, electricity, internet, laundry, regular meals, and various moving costs. The average cost for living in a dorm room is $11,510. That doesn’t include the cost of food or a meal plan. If they can commute to their choice of college, living at home will reduce college costs.
4. Encourage Your Child to Work While in School
Make sure your student knows that working even a part-time job can help pay for tuition, books, gas, and necessary supplies needed for their classes. Help them understand that every little bit they save before and during college will reduce the amount of student loan debt they’ll have to repay once they graduate.
5. Know the Fine Print
When savings and financial aid don’t cover all the costs of higher education, student loans will inevitably become a piece of the puzzle. Be mindful of the loans you take out and resultant debt that you take on. Scrutinizing repayment terms is critical so you know how much you child will owe after they graduate. When they start paying on the interest and principal of their loans, they could be eligible for any forgiveness options down the road.
Need other tips on how to approach financial topics with kids? Check out our recent posts here.
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