Get A Head Start On College Savings
The U.S. Department of Agriculture estimates the cost of raising a child to 17 for a middle-income family is about $285,000. And if you plan on sending your child to college, the price for a four-year in-state university will be an additional $107,280.
Here are some strategies to help you prepare for the cost of higher education.
When To Start Saving
The “when” to start saving for college is simple: the earlier, the better. The sooner you start saving, the easier it will be to make it a regular part of your budget, and the more time you give your money the potential to grow. If you put $100 a month toward your child's college education, after 17 years, you would have saved $20,400. But that same $100 a month would be worth over $32,000 if it had generated a hypothetical 5-percent annual rate of return.
How To Start Saving
The “how” to pay for college has several options that you should acquaint yourself with early, especially if you are trying to save for college expenses without taking student loans. It can feel daunting because you have many competing demands for money when it comes to your kids, such as braces, piano lessons, sports, summer camp, and more. You may feel like saving for college is a pipe dream, but this is where doing your homework comes into play.
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Financial Aid - To be considered for any financial aid, all students should complete the Federal Application for Federal Student Aid (FAFSA). FAFSA then determines if you are eligible for financial aid options, including Pell Grants.
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Scholarships - There are many scholarship opportunities available based on a variety of factors, including academics, athletics, culture, location, accomplishments, and areas of study. High school students should check with their guidance counselors for a list of scholarships and also research other options online.
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Tax-advantaged college savings programs - Many federal and state-sponsored programs are available, such as 529 plans. The income grows tax-deferred as you will not pay federal or state taxes on contributions, and distributions from a 529 are not federally taxed.
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Prepaid tuition plans - Many states offer prepaid tuition plans where you can prepay tuition at today's rates at eligible public and private colleges or universities. And many private colleges and universities now also offer prepaid tuition plans for their institutions.
Let First Entertainment Credit Union Help With Your College Savings Plan
Set up some time to meet with our investment experts to discuss the best options for you. We’re more than happy to answer all of your questions!
Michelle Lee
mlee@firstent.org
323-845-4434
First Entertainment Credit Union