About 66% of employees with a bachelor’s degree enjoy an average of 66% more income than their counterparts with only a high school diploma. This is one of many reasons why you might want to go to college. Perhaps you also want to set up your children for success and want to start saving for their future education.
However, college is expensive. On average, people pay $10,486 for in-state tuition and $15,873 for out-of-state. And that’s only for one year of school!
If you want to make it to graduation, you’ll need to know what your money options are. Thankfully, with a bit of financial planning, you can make your college experience a success.
Check out how to do it here.
Paying for College
The good news is that most college students do not have to pay the entire cost of college out of pocket. There are various investment vehicles, scholarships, grants, and low-cost loans available to help students pay for their education.
The problem is wading through it all.
No matter what stage you’re at, you’ll want to start saving as soon as possible to begin preparing for college. Let’s check out some options for saving for college as well as accessing extra money.
Savings bonds are issued by the Treasury Department and are a great gift from friends and family. They are usually purchased for kids. The principal of the bond is impossible to lose, and they earn interest over the years.
If you are lucky enough to have some savings bonds, you need to know how to use them to avoid paying taxes as much as possible on the interest. To avoid taxes, you must use them to pay for college the same year you cash them out, or you can roll them into a 529 plan.
A 529 plan is an investment account specifically designed for saving for college. All monies deposited into the account are tax-deferred, and, as long as you use the money to pay for college, you’ll never pay taxes on it.
Savings bonds can be cashed out and rolled into a 529 plan to enjoy these tax-free benefits as well.
Scholarships and Grants
Scholarships and grants are great ways to get through school debt-free! And as a bonus, most scholarship and grant money is not taxed. You can also get education tax credits while you’re a student. Technically speaking, that makes scholarship money more valuable than a paycheck for the same amount. Check with a financial advisor to see what the best options are for long-term tax strategies as you get through your degree.
Everyone planning to go to college should fill out the FAFSA (Free Application for Federal Student Aid), even if they don’t plan on taking out a loan. The information is used by the school and the government to determine your eligibility for grants and other student aid.
Lastly, you can apply for student loans, either federal or private. In many cases, you don’t have to start paying back student loans until after you graduate. Keep in mind that some will be accruing interest while you’re in school.
Help with Financial Planning
As you’re registering for classes and buying your textbooks, remember to consult with a financial planner too. Many people feel overwhelmed by the cost of college and want to make sure they make the right choices for their education. A great way to make sure you don’t miss anything is to hire a financial planner. They can offer expert advice on what to do in your particular situation. Not only can financial planners help you plan on how to pay for college, they can also help you set yourself up for a successful start to life after graduation.
Contact Advice Chaser to be matched with the perfect financial advisor for you!