Happy New Year! The beginning of another year is always a good time to think about positive actions you can take now to make your future life better. One area that gives families too much stress is paying for college. Instead of laying out a solid savings plan from the time a child is born, parents unfortunately forego this process in favor of hoping for the best from financial aid.
They complete the FAFSA with great expectations, but often have their hopes dashed when they don’t qualify for as much financial aid as needed. The choice then is whether to admit their student cannot attend a preferred college, or to take out an onerous amount of student loans. To keep this from happening to your family, here are some resolutions you can make in 2018 to give your family a financial head-start on the future:
• Resolve to start a college savings plans this year: It doesn’t matter how old your child is, or how much you can save. Take a positive action and create a college education savings plan. Small amounts saved can add up over time to provide future financial flexibility. If you have more substantial amounts of money to invest, look into the tax-advantaged 529 plans available in your state, see if you can set up a Coverdell Education Savings Account where money can be spent for elementary through college education purposes, or find out whether an UGMA Custodial Account can be used to transfer assets and put aside college money. You should definitely talk to a financial advisor who can help find a plan that is best for your family’s needs.
• Resolve to teach your children more about the value of money this year: Too many students reach college application age without having any concept of the value of money, how it is earned, and how it should be spent. Some parents think the responsibility is theirs, or don’t even understand these concepts themselves. But youngsters who don’t understand the value of money grow up to be college students who graduate with heavy student loan debt.
• Resolve to involve your child in college money discussions: The amount of money you can afford to pay for college should not be some type of family secret. Spend time with your student every year to discuss your real-life money circumstances and project how they could impact college expectations.
Teaching fiscal responsibility to your child as a life-lesson and implementing plans to pay for college yourself are two of the best ways to stay out of student loan debt. Learn more about saving for college in my book, Secrets of a Financial Aid Pro, which also contains information on completing the FAFSA, applying for financial aid, paying for college, and repaying student loans. Order it now and find out how to make your college journey easier.