As a young parent, I took every opportunity to ask for advice. I wanted input on how to discipline children, the best schools, engaging summer camps – the list seemed endless! However, the golden piece of advice was always about paying for college. I wanted to know how much parents expected their kids to contribute and the best way to invest college savings.
The student contribution advice was all over the board. Some parents had a set amount their kids needed to contribute each year of college, some parents planned to foot the entire bill, and others expected their kids to pay for most of it. UGH – what to do?
As far as where to invest the money, that varied, too! Some swore by college savings plans, others used Certificates of Deposits (back when they had nice yields), and others used a simple savings account.
Regardless of who contributes to the cost of college, saving for it is easier if you start early.
Set up a NEST 529 College Savings Plan.
Want an easy way to put money aside for college? Set up a 529 Plan. In Nebraska, it’s called the NEST 529 College Savings Plan, and parents and other relatives can make contributions. Many parents do this monthly, while other relatives contribute annually.
Get the kids involved.
Since your kids will directly benefit from a college education, it makes sense to have them help pay for it, right? When the kids are young, start talking to them about helping to pay for college. Perhaps they could use a piggy bank as children and graduate to a savings account as they get older. Heck, they can even contribute to their own 529 Plan! When in high school and college, income from summer jobs will really boost the amount they can save for college.
My son was a lifeguard for five years and was paid via direct deposit to his bank account. It sounds a bit cruel but I did not allow him to touch any of those earnings. I paid him for odd jobs around the house so he had spending money. By the time college started, he had $10,000 saved – half of his total contribution for college! Wat a good lesson in delayed gratification!
Create a game plan for paying for college.
It helps to have options when it comes to paying for college. One might be to have your kids attend a community college and transfer to a 4-year school. That’s a great way to save money on tuition and living expenses while they get their general education classes out of the way. If going this route, make sure all the classes will transfer.
Another way to save is to attend the local 4-year college and live at home. It’s not unusual for room and board to cost $10,000 per year! For our state universities, that is more than the cost of tuition! Sure, they will miss out on dorm life, but they can visit friends in the dorm often and save some serious cash.
Scholarships and federal financial aid are other ways to help pay for college, but it’s not always possible to earn a scholarship or qualify for federal or state grants. Everyone can qualify for a student loan but be cautious of how much debt your student is racking up over four years. For more on that, read this blog about getting a full-ride scholarship and other myths about paying for college.