How To Pay For College

How to Pay For College & Keep Debt At A Minimum

How to pay for collegeEvery parent that has a brand new baby is a target for very aggressive new parent marketing.  Free diapers, discounted formula, baby clubs, $1 life insurance policies, and college savings programs are all a part of this direct marketing on how to pay for college.

College savings programs are something that few parents concentrate on in the very beginning of their child’s new life.  Worrying about how to pay for college is pretty far from a new parent’s sleep deprived mind.

Considering that children born in today’s world can expect to pay around $100,000 for an undergraduate degree, college savings programs seems like a very smart move.

In this article you will learn how to pay for college before it can put you into debt:

  • Like retirement savings, college savings programs should begin as early as possible.  Look at various college savings plans.  Some plans will let you invest around $200,000 tax free.  You can put the money in savings, mutual funds or even CDs. This is one of the ways to pay for college.
  • Consider a 529 plan for college savings program.  All funds deposited are tax-free and can be used to cover college expenses tax-free.  It is best to consult with a financial adviser to find out the best ways to avoid taxes where ever you can.[bctt tweet=”Learn different ways to pay for college without getting into serious debt. See here…” username=”HBSMoneyTips”]
  • People wondering how to pay for college have turned to Education IRAs.  Education IRAs have always been a popular choice for people saving for a college education because the money can be withdrawn for secondary education as well.  This savings is not a wise choice if you are planning on taking out financial aid as well.
  • Most states have pre-paid tuition programs.  If you buy $25,000 worth of this program, your money will earn interest at the same rate as their college tuition.  This is the best choice for someone that will go to an in-state college.
  • There is a gift account available called the Uniform Gift to Minors Account where you can gift your child $14,000 without suffering a gift tax penalty.  When your child turns 18, he or she can use those gift funds any way they want.  If your child could possibly use those funds for something besides college, this may not be a choice you will want to consider.
  • Your how to pay for college plan can include the standard bank savings account.  You can set aside a portion of each paycheck to automatically be deposited into this college savings program.  Many people put $100-$200 into a college savings account each month. This is one of the best college savings programs and will help to reduce the amount of student loans.

How to pay for college without loans

College is not cheap.  In fact, most young adults start their life in debt due to their college education.  A good education is supposed to give people a good life, not make their life more difficult.  Tuition is not projected to decrease over time.  The best remedy against college debt is to begin saving as early as possible.

Learning how to pay for college can be a little overwhelming with all the various plans out there.  Your best option may be to sit down with a trusted financial planner and go through the best options based on your individual needs.

Comment below and let us know how you are saving for your child’s college education.

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