Whether you expect your children to pay for their own college costs, or whether you plan to help them, understanding the options is important.
Because college has become so expensive, it is a good idea to plan for college as soon as possible.
Don’t rely on any one college funding source; cultivate multiple options for college, including:
Tax Advantaged College Accounts
There are two main types of accounts that people generally think of when saving up for college: 529 Plan and Coverdell. Both of these accounts come with tax advantages, and can help your child grow his or her money faster.
Investment options should be studied out carefully, and you should be on the look out for funds that charge high fees. It is also possible in some cases to use an IRA to help fund a college education.
Scholarships and Grants
There are few things in life better than free money. You can help pay for college with the help of scholarships and grants. Scholarships are offered by schools and other organizations, recognizing some sort of achievement.
You can also apply for obscure scholarships, and scholarships with smaller pay outs. If you can get a few scholarships of between $500 and $1,500, it can start to really add up.
Grants are another options. The government offers need-based grants to students with low incomes. Other organizations might also offer grants to students who show academic promise, or meet some other requirement.
Find out now what is needed to qualify for certain scholarships and grants, and you can work toward earning them.
Work Study Programs
Federal work study is an opportunity for you to be guaranteed a job that can help you cover some of the costs related to going to school. You work 10 to 20 hours a week, and you receive pay.
When you qualify for work study, you are promised something on campus to help you earn the money you need for books, living quarters, food and other expenses. This can be a good way to help cover some of the additional costs of attending college.
There are a number of student loan options available these days. You can, of course, apply for Federal student loans. If you qualify, it is even possible to receive subsidized student loans. This means that while you are in school, the government pays the interest on the loans (you start paying interest when you begin repaying the loan).
If you need more money, there are private student lenders who can help. There are even student loan social lending web sites set up allowing you access to peer-to-peer loans to help you pay for college.
You should be careful about borrowing money for college, though. Start with Federal loans, since they usually have the lowest interest rates. After you have exhausted those options, then you can begin looking at private student loans from banks and individuals.
You will probably need to seek multiple sources of college funding. Do what you can to save up on your own, and to get scholarships and grants. Student loans should be the college funding source of last resort. Only borrow if you need to.
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