There are many sacrificing and doting parents in the US who have put their retirements filled with vacations, gardening or moving to some other state dreams on hold to save money for their kid’s college education. According to studies by some analysts, it has been seen that in the low-income households, 40% parents place sending their kids to college as more vital than saving for their retirement. While some view that graduating from college is itself an achievement, some others feel that one shouldn’t put back retirement saving before anything else as this is the most important savings for the seniors when they lack the ability to work on their own. When they incur debt in the latter half of their life, they may not get enough resources to become debt free and enjoy their golden years. However, despite knowing the necessity of saving for retirement, if you’re still keen on saving money for your kid’s college education, here are some tips that you may follow.
- Analyze the EFC towards education costs: You need to analyze the exact Expected Family Contribution (EFC) that you’re supposed to make towards your child’s college education costs. This is often determined by the Federal Government based on all the information that you provided in the Free Application for the Federal Student Aid (FAFSA). You have to give them information on your income, net worth, assets and child’s education costs. All such information can deduce the amount that you can contribute towards your child’s education. The lower EFC you can show, your kid will qualify for better grants.
- Save money aggressively for college: Apart from the unnatural rise in the price of commodities, the education fees and the tuition costs are also spiraling out of control. Most parents don’t pay much heed to this advice but when it comes to preparing yourself for paying for your kid’s college fees, there’s no shortcut to saving. Let go of the little things that you can do without so that you can save enough money in your bank account and then help your kid.
- Ask for Section 529 Gifts: If there is anyone in your child’s life who is bent on spoiling her by gifting her toys and unnecessary presents, ask them to contribute money to your child’s college fund instead of the toy stores. If you can redirect their extreme generosity into a 529 savings account for your child, you can make them give a gift that truly keeps on increasing with time. This is the reason why most states allow persons other than parents to contribute money to the 529 savings account.
- Revisit your life insurance policy: Research reveals that most parents are paying more than what they really need on their life insurance policies and a large part of their monthly income goes towards paying the life insurance premiums. However, you have to be careful enough in checking your life insurance policy so that you don’t end up paying an amount that provides you with an unnecessary coverage.
- Restrict using your credit cards: You should restrict using your credit cards if you don’t want your child to suffer due to your carelessness. You should remember that credit cards carry outrageously high interest rates and therefore the more you whip out your plastics, the more you’ll be liable to repay your debt obligations with the interest rates. Instead, use cash and save the extra money in your bank account so as to use it for your kid in the long run.
Despite the way in which the cash-strapped parents view paying for college, they should always try look for federal financial aid or the monetary aid provided by the schools. Follow the tips mentioned above to protect your kid from getting entangled into the vicious cycle of debt. Manage money as is fit for a parent so that you too don’t have to rush to the professional companies in order to become debt free.
“Jason Holmes is a regular writer with debtconsolidationcare and is also a contributory writer with other financial sites. His expertise is woven around various aspects of the debt free industry and with his e-books he tries to impart to people the different situations and simple solutions to get out of difficult situations. Some of his works include e-books like ‘Credit Score The Quintessential Therapy for a Happy Pocket’, Take Creditors and Collection Agencies to Small Claims Court’ and, My Story- From Depression To a Smile’.
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