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What should I be doing to save for college?

December 17, 2018

When considering college, one of the most prevalent worries from students and their families revolves around how to save for such an endeavor. Sure, it’s easy to think about it in terms of opening up a bank account and socking money away for years to save for college. That’s how we save for most goals. Realistically, preparing for college from a financial standpoint must not only be strategic, but it is also something that takes research and organization that involves time, energy, and organization.

When should I begin?

Many families begin thinking about college as early as when their children are born. Some start college funds with their financial institutions right away or begin saving for college with a specific 529 college savings plan. Some families think about college assuming that they will likely pay for it with student or parent loans. While these are all potential ways to begin saving and thinking about how to prepare for college, there are even more strategic moves you can make, even several years before your junior and senior years of high school.

First: research, research, and more research!

This isn’t the 1980’s. Today, with technology, researching schools is a lot easier, but that does not mean you should skimp on the research part. Don’t be fooled either. This is under the “what should I do to save for college” category because if you have literally no idea where you are going or what you are thinking of in terms of your life after high school, then it is impossible to plan financially. There’s a big financial difference between thinking of pursuing a liberal arts degree at a community college because you are not sure what you want to do in the future and pursuing your dream from when you were 6 years old to become a doctor and starting pre-med school right out of high school. Knowing where you are going, even in a general way, will help you understand the financial implications of that decision and plan accordingly. This, in turn, helps you save money on college.  

Start utilizing checklists early

The Office of Federal Student Aid at the U.S. Department of Education equips families with checklists to prepare for college. There’s even one for elementary school-aged children and their families. Thinking about what you may want to do for a living is also a helpful thing to research. Do you know how much a particular career expects to generate for an annual income in the next few years?

The Money Management Checklist will also help students and their families plan for college strategically. Parents can help children navigate and differentiate between schools by not only providing them with the emotional support and guidance needed but also being candid with them about what paying for college will look like. These tools can help bring families together to work on a realistic budget and plan for a child’s future.

Become familiar with the FAFSA

Around tenth grade, it is wise to begin to become familiar with the FAFSA process and understand what you will need to file. Sallie Mae reported that approximately two-thirds of families are not filing early which is highly recommended. Knowing how to navigate the process of filling out the FAFSA and understanding how it works will help you to face it without fear and with knowledge which we all know equals power. It is in your best interest to submit your FAFSA application in as early as possible, allowing you the best chances of the most comprehensive financial aid award packages. There is also the FAFSA4caster tool available on the FAFSA website to help research the actual cost of your education and related expenses once you select a particular school.

Calculate and compare costs

In addition, you can begin early in your high school (or even middle school) career by researching schools individually and learning as much as you can not only about the programs you are thinking of going for but also about costs, financial aid, specialty programs, etc. Your preparation can also involve utilizing a net cost calculator which will help you estimate the cost of college (after estimated savings, federal student aid, grants, scholarships, etc.)

Start a 529 college savings plan

A college savings plan, often referred to as a 529 plan can help your money for college grow in a way that not only gains interest, but it is also tax-free. Parents can open one of these right away. Parents and students can also put financial gifts right into these savings plans. This is another way to add to your savings throughout the years as a student receives monetary gifts for special occasions.

Research scholarship opportunities

It is never too early to begin researching scholarships and thinking of ways that hobbies, sports, and other activities may translate into scholarship money. Find out how and when is the best time to apply for particular scholarships and search for not only schools but other civic organizations and companies that offer scholarships to students. Sometimes companies will offer scholarships to the children of those adults they employ. Looking into all of these options will allow for a better idea of approximately how much money you may be able to put from scholarships toward paying for school. This counts as saving for college. Doing this research early can also help you to budget for college better.

Consider a part-time job

This is also a wonderful time for a student to consider getting an after-school or summer time job. Again, make sure if this money is going to be socked away and saved, that it is done in a parent’s account to ensure the best financial aid outcome. A student can earn up to $6,660 for the 2019-2020 year without the income affecting student aid.

Even if you are not working double shifts at this moment in time to pay for college, it is never too early (or late!) to start thinking about how to navigate saving any amount of money possible for college. There are many actions to take that can add up to big savings in the long-term making the return on investment of a college education even that much more valuable.