Time flies, and before you know it, our children grow up to begin their careers as young adults. We don’t know what career they may pursue or if that future career even exists today. However, one of our duties as parents is to assist our children in making smart financial decisions to help them secure a brighter financial future.
Higher education may involve four-year college and possibly post-graduate studies. However, not everyone is cut out for the traditional approach, nor does every profession require it. Some students prefer or can benefit from the one or two-year programs that provide them vocational training and fast track them into the workforce.
Whichever path your child decides to take, they all require a financial commitment. Here are alternative funding sources for college or vocational school for parents and young adults:
Commit to Your Personal Savings
Kudos to the parents who start saving while their children are toddlers or some, even younger. Other parents find it easier to start saving later, and budget daycare and preschool costs towards college savings. How much do you need to budget for a five-year-old? Say the cost of daycare/preschool averages $200 a week. If you start applying that towards savings when the kid is five, you should accumulate enough to fund four years of state college costs assuming moderate investment returns and education cost increases.
Explore Investing Strategies
One option is to personally invest the funds in an individual or joint account. This gives the parents the most control in managing and distributing the funds to their children. 529 accounts are another option. They are state-operated investment plans for college savings, and they provide tax benefits. If your child doesn’t need all the money in the account, you might designate another beneficiary or withdraw the money and pay the penalty. Some states also offer another 529 account option, known as a prepaid tuition plan, which enables you to pay for state university education at today’s prices. However, it might not cover other costs such as room and board, computers and more.
Apply for Financial Aid
It’s estimated that three out of four full-time students receive some type of financial aid, including scholarships, grants and loans. The office of Federal Student Aid is a good resource for grants, loans and work-study programs. Federal programs may offer lower fixed rates and more flexible repayment loan terms than private student loans. Even if you think your child won’t qualify, apply anyway – You might be pleasantly surprised!
Your peak earning years often occur later in life and after many child-related costs have ended. Parents may have more disposable income and may handle college costs out of pocket. However, have a set plan if this were not to work out.
Get your children involved in the financial aspect of their education. Apply for student scholarships – even the smaller ones add up fast. They can enhance their resume by taking special classes and working. Advanced Placement (AP) courses during high school may provide college credits, and vocational courses can help steer the student.
There’s a handful of schools that don’t require tuition. A few states, including Maryland, New York, Oregon and Tennessee, offer tuition-free schools with restrictions based on residency, household income or other factors. Other colleges waive tuition; however, they require some form of service requirements and may bill for room and board.
Enlist in the Military
The military offers a range of benefits. These include job training, enlistment bonuses, and academies that combine higher education and officer training.
It’s never too early to start saving for your toddler or teenager. Learn your options and discuss with your advisors the best course of action for you. Secure your future wisely.
This article can also be viewed at the Reno Gazette Journal.