Do you have a few future college students at home? Whether you’re planning to help pay for a child’s college expenses in the future or you’re encouraging them to handle it on their own, the best thing to do is start planning now.
- Increasing Costs
The costs of college are constantly rising. If your child is young, be aware that the current cost of attending college will most certainly change over the next few years and plan accordingly. On average, they increase at a rate of 2-3% a year.
- Years of College
Many college students do not complete their undergraduate studies in 4 years. Degree changes and a failed class here and there add time. When planning for your child’s college expenses, you may want to figure an additional year or two into the equation.
- 529 Plan
A 529 plan allows parents to contribute money, tax-free, into a college savings account. This money can eventually be used to pay for qualified educational costs, including fees and tuition.
- Coverdale Educational Savings Account
Like 529 plans, this type of college saving account also allows parents to invest money, tax-free, into a college savings account. However, this type of account limits annual contributions. Depending on your annual income, you may not be able to enroll in this option.
- Custodial Account
Parents can contribute money for their child’s college education in a custodial account. However, once your kid reaches a certain age, the money in this type of investment will automatically transfer to him or her and you won’t have control over how it’s spent.
- Scholarships for Seniors
If you have a senior, it’s a little late in the game to set up a savings account. Are you worried about how you will pay for your child’s college? Fortunately, scholarships for seniors abound. If your child is about to graduate high school, encourage him or her to fill out as many scholarship applications as possible. If your kid isn’t sure what’s available, he or she should talk to his or her high school guidance counselor.
- Federal Grants
Students from lower income households sometimes qualify for federal grants. If your family meets threshold requirements, your child’s education might be completely or partly paid for by the federal government.
- GI Bill
The GI Bill pays for former military personnel to attend college. If you served in the military and enrolled in the Post-9/11 GI Bill and didn’t use it, you can transfer those benefits to your child. If your child serves in the United States military for a certain period of time, he or she will be eligible for the GI Bill.
- Lifetime Learning Credit
This credit reduces the amount you will need to spend on college tuition by providing a break on your income taxes. One note, no matter how many kids you have attending college simultaneously, you can only claim this credit once per year.
- American Opportunity Tax Credit
This tax credit can be applied for 4 years. This credit encompasses books and other costs in addition to tuition and fees. Books can cost hundreds of dollars every semester, it is especially important to take advantage of this credit.
College costs are expensive and will probably continue to increase in the future. However, you can be prepared when the time arrives for your kid to enroll in his or her first post-secondary courses. By incorporating a few of the aforementioned 10 items into your college savings plan, you hopefully won’t have to struggle to pay for your child’s education.