Saving for College: Tips for Students & Parents

Paying for college is a serious topic. Regardless of your child’s age, there are simple financial steps you can take to prepare for this and ease the load of college tuition.

Paying for college is a serious topic. Regardless of your child’s age, there are simple financial steps you can take to prepare for this and ease the load of college tuition. Not only will this expand their options, but also launches them into adulthood with as little debt as possible.

In this post, we will cover how both students and parents alike can start saving for college.

 Source: https://www.valuepenguin.com/student-loans/average-cost-of-college

Breakdown of the Average Costs of College

Public two-year (in-district)	Public four-year (in-state)	Public four-year (out-of-state)	Private four-year
Tuition	$3,570	$9,970	$25,620
Room and board	$8,400	$10,800	$10,800
Books and supplies	$1,420	$1,250	$1,250
Transportation	$1,780	$1,170	$1,170
Other expenses	$2,410	$2,100	$2,100
Total cost	$17,580	$25,290	$40,940

Part 1: Saving as a parent

If you’re a parent, you’ve probably asked yourself when you should start saving money for your child’s tuition?

In short, as early as possible. Saving up for your child’s college experience is a long-term commitment that includes creating a plan, subject to change. Before you start saving, however, you need to evaluate your own current financial state. If your finances are messy, it will be harder for you to complete the monthly college payments when they come around.

Start by asking yourself questions like:

• Have you paid off your own student loans?
• Are your finances on track for retirement?
• Do you have any outstanding debts?
• Do you have an emergency fund? If you do, how much is in it?

When you start your child’s college saving plan, you can choose between investing a portion of your income bimonthly, monthly, or annually. For more information on choosing a college savings plan, check out Dave Ramsey’s blog post  or NerdWallet’s blog post for suggestions of exactly how much to contribute and when to start.

Steps to Saving

1. Allocate

Evaluate how much of your earnings you can contribute to your child’s college fund. Starting early allows you to earn interest over time, especially with an Education Savings Account (ESA). If you are just starting to save for your oldest child, it may make more sense to dispense a larger amount to them than to your youngest, which still has time to grow over time.

2. Track the Data

To have an accurate idea of how much money you can allocate, you need to track your expenses and possibly set a budget. There are plenty of free budget software options that will take the pain out of creating a budget.

3. Make a list

Evaluate needs vs. wants, with your teen’s input, to clarify what college goals are possible. This will help you figure out how much you should be saving.

4. Review Parent Loan Options

If worse comes to worst, and other routes have been exhausted, know that there are student loans for parents.

How much should I save?

Before deciding what amount you are going to save for, you must consider the different college options, as they can greatly affect the price.

Consider the following questions:

• About how much will tuition increase by the time your child attends college?
• Can you afford to send your child to an in-state or out-of-state school?
• Will your child choose a private or public university?
• Does your child qualify for scholarships?
• Is going to graduate school part of your child’s plan? If so, will you be helping them financially?

These questions are helpful for figuring out the projected cost of tuition; after that, you can make a plan to meet or come as close to that figure as possible. Starting the conversation with your child about college early helps develop healthy expectations and allows your child to prepare early, if necessary.

Even if you know you will not be able to pay the full cost of tuition, you can still create a savings plan based on what your finances allow. If applicable, speak to your financial advisor to create a realistic college savings plan.

Part 2: Saving Tips for Students

High School Students

High school students are on the cusp of adulthood, so they should ease into adult responsibilities, including understanding and managing their own finances. There are three straightforward steps that will help with paying for college in a huge way.

1. Fill out the FAFSA (Free Application for Federal Student Aid)

The FAFSA helps you find government and institutional grants you can use for tuition and fees, as well as information on loans. This form becomes available for a student applying to college on October 1 of each year.

As a rule of thumb, accept grants that do not require repayment before taking out loans. Then opt for federal student loans before seeking private student loan options.

2. Apply for scholarships

Merit scholarships are scholarships based on grades and SAT and ACT test scores, so a little hard work in high school could pay off big time when it comes to applying for college, both financially and personally.

Many times, you don’t even need to apply for merit scholarships. They are automatically added to your student profile if you meet that school’s requirements.

There are other scholarship opportunities available- such as need-based scholarships, athletic or talent-based scholarships, etc. Scholarship monkey, for example, is a database full of scholarships available for different opportunities. Scholarships may only be for a semester, a year, or your entire academic career.

3. Get a part-time job

Find a part-time job to experience the realities of adulthood and personal finance.

College Students

Even as a college student, there are still ways to save and help pay for school.

1. Get a job

On-campus jobs are convenient because they offer flexible hours, an opportune location, real-world experience, and possibly even discounts on school-related expenses. Apply to one off campus and one on campus and compare the salary, workload, and time requirements to make the best decision.

2. Seek more scholarships

Just because you’ve already been accepted does not mean the scholarship hunt is over. Apart from scholarships or awards distributed by the university, there are other opportunities available for college freshmen and beyond. Check your university’s scholarship opportunities page to see if you are eligible for any and what you have to do to apply. Applying to multiple “small” scholarships can have a big impact when added up.

3. Remember to Fill Out Your FAFSA Each Year

As mentioned earlier, the FAFSA application is not a one and done type of thing. You must fill it out every year that you require financial aid. To stay on top of deadlines, look out for emails or alerts from your school’s financial aid office.

4. Leverage Student Discounts

Tons of establishments- movie theatres, clothing stores, grocery stores, restaurants, subscriptions, etc.- offer student discounts. Often, your college bookstore will have technology discounts. Get into the habit of asking if an establishment has student discounts, and be prepared to show validation such as your student ID. Check out unidays for online student discounts.

5. Economize

Reduce your spending by choosing cost effective choices such as riding a bike, eating at the cafeteria, making your own coffee, buying used and selling your old textbooks, & using campus amenities instead of paying for memberships.

These every-day choices seem small, but when put together, they can save you a lot of money that can be allocated to more important things.

6. Make Interest Payments

If you have loans, start paying off the interest while you’re still in school. This will help you pay back your loans quicker and save you thousands down the road.

Worries about paying for college should not discourage anyone from attending. To ensure that there is at least some money for higher education, a college savings plan is the best way to go.