Get a Jump Start on College Financing
Planning Your Child’s College Education
Are you the lucky parent of a newborn child? Between diapers, special food, and frequent doctor’s visits, you know it’s not cheap raising a baby. But if you think your baby is costing you a lot of money now, imagine trying to pay for their college education in about 20 years. With college tuition and inflation constantly on the rise, many experts predict that a four-year college education will cost upwards of $100,000 in the next 15-20 years. Rather than scrambling to finance your child’s education years from now, why not get a head start right now? By making the proper investments, you can take care of your child’s college financing before they’re even out of high school.
How to get a Jump Start on College Financing
- As with just about any form of investment, the sooner you start saving, the better. Don’t procrastinate on this investment; make a commitment to your child’s education as early as possible. Also remember, you don’t have to pay for all of their education on your own, scholarships and student loans can lighten the load.
- After you’ve decided to jump start your child’s college financing, get a rough estimate as to how much you’ll need to save. Consider that the tuition for an in-state school is currently about $10,000 per year, though that number will surely be inflated by the time your child is ready for college.
- While you should always talk to your financial advisor before making any major investments, we recommend using low expense mutual funds if you can invest for over ten years.
- You may also have access to state college savings (529) plans, which can earn stock market returns on college savings you won’t be using for several years. The contributions are allowed to grow tax free until it’s used to pay for college, although there could be sizable penalty if the savings are not used for college.
- Finally, there may actually be pre-paid tuition plans depending on where you live. However, these types of plans are really only beneficial when tuition is rising more than just 5% a year.
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