Don’t Panic: It’s Never too Late to Start College Financial Planning

If you’re like most of us, life catches up with you. Before you know it, your student is choosing a college, which means you have to think about paying for it. Unfortunately, too many parents, including me, wait until our kids are in high school to ask the question: How are we going to pay for college?

If you start early

Ideally, parents should start planning when children are young. The easiest way to start the process is to open up a 529 college savings account. There are two options available: prepaid tuition and college savings plans.

Save as much as you can as often as you can. Most importantly, don’t bury your head in the sand. High school creeps up on you, along with the cost of tuition.

If you start late

Don’t panic. Everything is not lost. You still have time to prepare financially. If you take some logical steps during high school, paying for college should be doable.

First things first: You have to be realistic and get creative. Have a discussion about what both you and your child will contribute. If you have this discussion early in high school, it will make the college search easier. Colleges that are completely out of your price range should be crossed off the list. Don’t worry. There are plenty of affordable college options available for every student.

Secondly, it’s time to get serious about searching for scholarships. You and your student need to become scholarship searching rock stars over the next four years. Schedule time every single day to search and apply. Don’t wait until senior year, however. There are scholarships available for all age groups.

Next, get creative. Use tools like Gift of College to add to the college fund. Gift of College allows friends and family to contribute to your student’s college fund: a gift registry for college savings. Instead of gifts for special occasions, your family and friends can give a gift card. These cards are linked to a 529 savings account. Another tool is Raise.me, which has partnered with colleges to award micro-scholarships to students. Students get cash scholarships for grades, extracurriculars, and volunteering. UPromise can also be used by families to add to college savings. As you shop, you earn cash credit.

Even if you haven’t saved, most colleges allow parents to break up tuition into payment plans. It’s much easier to pay monthly than cough up upwards of $20,000 all at once.

A simple plan that can work

Here’s a simple plan that can help you raise $15,000 per year for college. That’s not chump change and will pay for community college and some state universities.

1. Up to $2,500 from Uncle Sam (American Opportunity Tax Credit)

2. Child labor: Put your teen to work at a summer job ($8 an hour x 40 hours a week for 9 weeks = $2,880)

3. Student loans: up to $5500 max per year

4. Family savings: cut your teen to an occasional driver and stop subsidizing entertainment.

5. Scholarships and grants: leverage grades, test scores, athletics, arts for merit-based grants; apply for local scholarships; keep applying during college.

6. Friends and relatives: Ask for college fund contributions instead of presents

7. Corporate sponsorship: Aome employers subsidize education for employee’s families

8. Reduce college expenses: Watch meal plans; buy used textbooks or rent; earn cheaper credits at community college, AP classes or dual credit classes; sell your student’s car after he or she leaves for school.