Paying for College
What's the best way to pay for college? There's no one answer. Each family has to find their own best way. Here are a few ideas that might help you find yours.
Investing in Education
Along with your home and car, a college education — yours or your child's — may be one of the biggest expenses of your life. But, it's also one of the best investments you can make. Among Americans (1) ages 25 to 32, median annual earnings for full-time working college-degree holders are $17,500 more than for those with high school diplomas only. Here are some tips to help you save for that investment.
Start Saving Early
The earlier you start saving, the better. There are lots of savings vehicles to help you get started, including 529 Savings Plans or Coverdell Education Savings Accounts. And at , we even offer Education Planning to help you maximize your savings. When your child receives cash gifts at birthdays or other milestones, put them straight into their college savings. If you can contribute even a small amount each month too, that's even better.
Choose Your School Carefully
Going to a public college can help save you thousands of dollars, especially if you go in your home state. You might want your child to go to a school with lots of name recognition, but remember that they can get a quality education at a more affordable college, too. Starting at a community college and then transferring to a more expensive school is another great way to save money.
Take Advantage of Scholarships
Make sure you apply for as many scholarships as you qualify for. It's an easy way to help defray the cost of college, whether it covers all of your tuition, or just the cost of books for a semester. If your employer offers tuition reimbursement for you or your children, be sure to use that, too.
Apply for Financial Aid
Be sure to complete your family's FAFSA (the Free Application for Federal Student Aid) completely and on time. It will let you know how much need-based federal aid you're eligible for. Schools will use it to determine your financial packages, so it's very important to fill it out.
Consider Taking Out a Student Loan
If after scholarships and financial aid, college is still too costly, it may be worth taking out loans to pay for the difference. Borrow no more than you absolutely need, and be honest with your child about how much they'll owe at the end — and whether you'll be able to help them pay it off.
Top 5 Things You Should Know About Paying for College
When Should I Start Saving for College?
The answer is up to you — but with college costs increasing every year, the sooner you start, the better. With compound interest, if you start saving when your child is born, you'll have to save far less every month than if you wait for them to start high school or even middle school.
How much should I be saving for college?With college costs increasing at twice the rate of inflation, it is important to start saving early. Interest working for you now in a regular savings program is much better than having interest work against you in the future in the form of education loans. Use our college savings calculator to determine how much you should be saving for college on a regular basis.
A tax-advantaged investment program designed to help students finance the cost of education. There are two types of 529 Plans: Prepaid tuition plans and college savings plans. All states offer at least one type of 529 Plan. Fees, investment options, restrictions, tax advantages, and other features vary depending on the state.
When should I begin saving for my child's college?When saving for college, compound interest can be your friend. However the longer you wait to start saving the less interest you will accumulate and the more you will have to save. Use this calculator to determine when to start saving for college and to help illustrate what a small amount of monthly savings might grow to if you start today.
What are the advantages of a 529 college savings plan?Tax-deferral can have a dramatic effect on the growth of an investment. With a state-sponsored 529 College Savings Plan your contributions can grow tax-deferred (some states allow contributions to be partially or completely deductible) and distributed income tax-free as long as distributions are used for qualified education expenses such as tuition, fees, room and board at higher education institutions.
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