How Parents Can Start on Their Child’s College Finance Planning

With college fees increasing every year, it has become impossible for the average parent to pay their child’s tuition entirely on their own. Making smart saving decisions will at least help you cover a larger part of the fees while keeping your child’s student debt to the minimum. And it definitely pays to start thinking of your college finance planning earlier rather than later. The earlier you start, the more you will save, and the lower the debt.

Here are some tips to help parents start saving money for their child’s higher educational needs.

Parents kissing their baby's cheeks.

Enroll in 529 Plans

Many states have 529 savings plans to help families begin saving for college as early as possible. These savings plans are meant to assist with any of a child’s college tuition cost by the time they are ready to enroll in a college.

You don’t have to be a resident of any one particular state to enroll in that state’s 529 plan. However, it may be best to see what options are available in your home state’s 529 plan to get the best deal for you and your child. You also earn tax credits and tuition credits with these types of plans.

Open a Custodial Account

The UGMA or Uniform Gift to Minors Act allows parents to transfer funds to a trust for their minor child. This is known as a custodial account. Any money that is transferred into the custodial account belongs to the minor but is managed by the appointed custodian. This is until the minor becomes an adult. One benefit of a custodial account is that all income from the account is taxed at the child’s rate. The child’s rate is often lower.

Look Into Pre-Paid College Tuition Plans

Not all states participate in this type of system. If you live in a state where you can pay some of your child’s college tuition now, go for it. This allows you to save money further down the road by locking in a good tuition rate now.

Pre-paid tuition plans are exactly what they sound like. Parents may pay part of the tuition now, and then when their child begins college, they have part of that cost paid already. See if this type of tuition plan is available in your resident state.

Encourage Your Child to Take Up an After-School Job

If your child has decided they would like to contribute to their own college savings, an after-school job is the perfect way to get started. Taking up a job in high school is more than just a means to make money. It also teaches your child how to be responsible for planning and working.

The sooner you start saving and thinking about your college finance planning strategy, the more money you can have at hand for college when your child begins their higher education journey.

 

Lender Rates (APR) Eligibility
Sallie Mae logo.
1.13% to 11.23%1 Variable
3.50% to 12.60%1 Fixed
Undergraduate and Graduate
VISIT SALLIE MAE
Credibe company logo.
1.04% to 13.19% Variable
3.00% to 14.14% Fixed
Undergraduate and Graduate
VISIT CREDIBLE
Lendkey company logo.
1.49% to 7.64% Variable >800 FICO
3.99% to 7.64% Fixed
Undergraduate and Graduate
VISIT LENDKEY
Ascent company logo.
1.82% to 11.32% Variable
3.27% to 12.46% Fixed
Undergraduate and Graduate
VISIT ASCENT
College Ave company logo.
0.99% to 11.98% Variable
2.99% to 12.99% Fixed
Undergraduate and Graduate
VISIT COLLEGE AVE
3.47% to 6.11% Variable
4.60% to 7.40% Fixed
Undergraduate and Graduate
VISIT ISL
Earnest company logo.
1.04% to 11.44% Variable
3.34% to 12.78% Fixed
Undergraduate and Graduate
VISIT EARNEST
1.20% to 11.59% Variable
3.31% to 11.99% Fixed
Undergraduate and Graduate
VISIT ELFi
1Variable interest rates start from 4.12% APR to 10.98% APR. We also offer fixed interest rates from 5.74% APR to 11.85% APR. Click here for important information. Terms, conditions, and limitations apply.
College Raptor is not a loan lender and does not assume responsibility for suggesting a loan to a user who may not be eligible for it. Rates, terms, conditions, eligibility, approval, and other considerations are the decisions of the lenders and may vary depending on which lender or marketplace the user selects. We urge users to carefully consider and review all loan options and terms before committing to taking out a loan.

Leave a reply

Your email address will not be published. Required fields are marked *