Jared Young has been thinking about paying his children's college tuition their entire lives. Longer than that, actually.
“Before they were born, we were thinking about it,” says Young, 52, of Castalia, Ohio.
With two kids in college now and two in high school, he and his wife, Judy, are busy finding enough money to cover multiple college fees. The good news is that they started saving when the kids were kids.
“I set up a 529 plan for each of them,” Young says.
Whether you've started saving early like the Young family or you're just starting out, here are 11 ways to manage multiple college bills.
11 tips for affording college
1. Take advantage of 529 plans. Are you looking for a place to stash your kids' college savings? The state-sponsored 529 college savings plan is a helpful resource.
“In many cases, this is the best tool to save for college,” says Ryan DiRusso, a certified financial planner at United Financial Planning Group in New York. “The money is tax-deductible if you use it for qualified educational expenses.
“With the new laws, if your child decides not to go to college or gets a scholarship, part of the 529 money can be transferred to a Roth (retirement savings account) for your child or you can transfer the 529 to another family member who wants to go,” he adds. to the collage.
Learn more: Pros and Cons of 529 Savings Plans, Prepaid Plans, and How to Decide
2. Start early. If you have several years before your children become college students, put that time to good use and start saving early.
When did you start? As soon as possible
“Beginning the process of regularly contributing to your children's education, through a 529 plan for example, is ideal when they're born,” says Ryan Johnson, founder and financial planner of Hundred Financial Planning, which is scheduled to launch in Grand Rapids, Michigan, in early 2024. “This allows investments to grow over time.”
But not all families will be able to start this early.
“This is not always a reality for some families, as they have less disposable income when (the children) are younger,” Johnson says. The natural starting point is…as quickly as possible.
Turning a pay increase into a savings opportunity, rather than a lifestyle boost, is a great strategy, he adds.
3. Get the family involved in paying for college. Grandparents, aunts, uncles, cousins, and family friends may want to contribute to your children's college education. Ask them and let them participate.
“Have open conversations with grandparents and others who are willing to help early in your child's life,” says Vida Gatulis, a certified financial planner with MainStreet Financial Planning in Westlake Village, California.
Learn more: Why grandparents should set up a 529 college savings plan
Manage your children's expectations
4. Be realistic about how much you can pay. College is expensive, and it may not be possible to pay four years of tuition for two or three children. Be honest and direct with your children about this possibility.
“I have a couple of clients who have three kids in college. They have been very clear with their kids that they will pay for their first year of public education. After that, the kids will have to finance their college through loans or work,” DiRusso says. “Kids have expectations.” Clear while the parents fulfill the promise they can financially deliver. The program will not pay full tuition, but it will go a long way in reducing college costs for children.
5. Be smart about your college savings budget. Money can be very tight when you have two or three students in college. Watch your budget closely.
“When you have multiple kids in college at once, there will be years where college costs overlap and expenses are really high. These lumpy expenses can really wreak havoc on the budget,” says Gatulis. “Create a college financing strategy that takes this into account and strives to meet Your budget requirements. For example, it may make sense to use your cash flow when you have one in college, and delay using grandparent funds/529 plans until years when you have multiple children in college.
Think about alternatives for a year or two
6. Go to a low-cost community college for two years. Instead of attending expensive four-year colleges, choose less expensive community colleges for the first two years of your children's college education. Doing so will help reduce education costs.
“Because the first two years of college focus on completing general education course requirements, you can save a tremendous amount of money starting at a community college and then transferring to the college of your choice,” says Gatulis.
7. Consider public colleges. Another way to reduce multiple expensive college tuition bills is to attend low-cost public colleges and universities.
“Expecting to save for three kids who are going to Ivy league schools is expecting a lot. Instead, try to save enough to cover public school costs,” DiRusso says. “If your child prefers a private school, you have some money to help while they can use other resources.” To pay the difference. It will give them ownership of their college decision as well.
8. Add travel expenses. If your children are interested in out-of-state colleges, know that your 529 college savings plan cannot be used to cover travel expenses to and from college.
““Travel is not a qualified 529 plan expense, so if your kids are going out of state for school, that's an expense you'll have to cover with cash flow or other savings,” says Gatulis.
9. Applying for grants and scholarships. A great way to reduce college tuition costs is for your children to receive grants and scholarships.
“Encourage your children to look for grants/scholarships. There are many programs out there. “Most people don't take the time to look at the tremendous financing opportunities,” says Brandon Gregg, a certified financial planner at BBK Wealth Management in Lafayette, Indiana.
Plus: Desperate parents will pay big sums to lower college prices
Have your kids contribute
10. Ask your kids to help save for college. Get your kids involved in saving for their college education. A part-time or summer job while in high school is a good place to start. Similar opportunities may be available when you start university.
“Encourage your children to save. This can be a great opportunity for children to learn the value of saving and the value of working,” Greg says.
11. Find ways to earn college credits early. For example, high school students in Ohio can earn high school and college credits simultaneously through the state's College Credit Plus program. It allows them to enroll in both community college and university courses — and it's free if you attend a public college or university in Ohio.
Get a head start on earning credits
“For us, this was a real game-changer,” Young says. Through the program, one of his sons earned 65 college credit hours upon graduating from high school. “He's already paid half of his college costs,” he adds.
A young family will face the financial challenge of multiple college fees for some time. To overcome this problem, Jung reminds himself of two things:
“Save and pray.”
Lucy Lazzaroni is a freelance journalist living in South Florida who writes about personal finance, the arts, and nonprofits. Her writing is featured on Next Avenue, Bankrate, MoneyRates.com, MSN, and the National Endowment for Financial Education. She previously worked as a staff writer at Bankrate.
This article is reprinted with permission from NextAvenue.org©2024 Twin Cities Public Television, Inc. all rights are save.
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