Well, we all know children are expensive – there are the diapers, food, clothes, the trips out, childcare fees, the list goes one.
And it doesn’t get any better as they get older. That’s when they start demanding all the latest gadgets and gizmos, and then there are university fees to consider.
Did you know the average tuition at a four-year public university soared by 15% between 2008 and 2010, a figure fueled by state budget cuts for higher education and staggering 40% increases at universities in some states, including Georgia, Arizona and California.
A Harvard student, for example will pay $18,277, while at Pennsylvania State University, the cost comes in at $19,816 – that’s almost half the average annual household income for some families.
So just how can parents afford to give their youngsters the best start to their future careers? The Department of Education is campaigning to increase student and parent awareness on costs of higher education and that’s the first step, know what you’re getting into and then you can plan for it.
No one wants to deny their children a college education. You don’t want to be in a position where your child proudly brings you their acceptance letter for the college of their dreams, the one they believe perfectly matches their career aspirations, and yet, you have no way of paying for it.
The key is to start saving early. Any parent will tell you how quickly the years flash by. There are lots of choices out there, traditional investment options like savings accounts, taxable investment accounts, annuities and US Savings Bonds.
Asking your child to work a part-time job
Most parents also believe their children should pay at least some of their education costs. Of course you don’t want them struggling with their studies on top of a job. But working a small part-time job should help take the strain from you and teach them to take responsibility for their own lives, something that can only stand them in good stead when they enter the workplace.
You or your child could borrow now and pay later. Some people look on funding college education as they do buying a home, borrow money now and repay the debt with higher earnings after graduation. But who wants to be saddled with such a large debt at such a young age?
Scholarships are obviously the most cost-effective way of your child getting through college as someone else pays. But don’t rely on them, no matter how clever your son or daughter is, not everyone can get one. Scholarships are generally reserved for students with special qualifications such as academic, athletic or artistic talent or those interested in particular fields of study, who are members of underrepresented groups or who live in certain areas of the country. There are lots of free scholarship databases out there – input your profile and they provide you with a list of any funds you could be eligible for.
But, the best route to go down surely has to be saving up in advance so you have no worry about funding your child’s future. Section 529 plans, , snappily named after section 529 of the Internal Revenue Code, are an increasingly popular way of setting money aside. In these state-run plans your earnings grow tax-deferred and distributions from your account are then tax free as long as used for funding higher education.
Even if you child is very young now, if you start thinking about funding their college fees as soon as you can, you’ll have the comfort of knowing you have saved enough to be able to give them the education they deserve when your little one is all grown up.
This guest post was written by Liz on behalf of currency-converter.com