Like many well-intentioned parents, saving for your child’s college education is always part of the plan. But somewhere between late-night feedings, diaper changes, buying a house, after school sports and family vacations it became much harder to save for college.
While it is always better to start saving early, we all know it’s not always possible. The cost of college is daunting. And if you have other debt, socking away any extra money may work against your financial goals.
But, like most major investments, devising a plan can make the task of saving for college a little less overwhelming.
First, figure out how much a college education will cost by using an online calculator. Tuition plus room and board at four-year public colleges can cost anywhere from $20,000 to $35,000 a year and the average private school tuition and room and board is estimated at $45,000 annually.
After sticker shock subsides, keep in mind that there are several options to consider. If you have littler ones and therefore more time to save, you might consider a tax-advantaged 529 savings plan. For parents who need a more immediate plan, a Home Equity Line of Credit (HELOC) may be the best option as it draws equity from your home and the interest rate is much lower than a student loan. Many banks, like Rockland Trust, have competitive HELOC rates that make your money go farther.
The next step is to figure out how much you can realistically afford to save or the amount of equity you can pull from your home without compromising your future financial security. Few people can cover the entire cost of college but saving a designated amount each month consistently over the course of years can cut the cost considerably. If you need help prioritizing your goals, financial advisors like the team at Rockland Trust can be a great resource.
Finally, when it comes time for your son or daughter to decide on their dream school and your college nest egg does not cover the full price of a four-year degree program, there are a number of other ways to generate cash such as state and federal financial aid, private grants and scholarships and work-study programs. And remember, you can continue to save while your child is attending college.
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