Tax time is over. Even if you are getting money back, it’s still probably not enough to cover your child’s college tuition. Here lies the main stress that many parents face when it comes to sending your child to their ideal college. How am I going to pay for it? How much college debt will I or my child have to face in order to get their education?
This is why I am excited to share my interview with Jim Anderson of Making College Worth It. Jim helps parents find the right school based on their child’s interests and what the parent can afford. Jim was a financial planner, but after helping his kids with the college process he saw a need to better help parents understand and balance the costs with the child’s interests and needs. As Jim says, “Money has to be part of the discussion when choosing a college. It’s way more expensive than when we went to school. Less than .2 of college applicants get a full ride for college.
Jim provided so much guidance that I am breaking down our interview into a series of blogs. This week, I am focusing on what Jim shared with me about what parents should be considering during their child’s life.
What should parents be thinking about from birth to middle school when it comes to how to pay for college?
Jim: Parents need to remember they only have 18 years to plan how they will pay for college. They should consider putting money into a 529 Plan because you do not pay taxes on the growth. You want to be conscientious of how much money you put in to start in case your child does not end up going to college. Parents should also work with a financial planner. They can suggest a mix of stocks and bonds to help pay for college.
One great tip Jim shared is for parents to sign up for UPromise. It a loyalty program that you can receive anywhere from 2% – 5% back from things you normally purchase that will go in your child’s college education fund. As a bonus, UPromise will kick in another 15% if you have a 529 Plan. Jim had a client that saved $18,000 just from UPromise.
What should parents be thinking when their child is in high school?
Jim: The mistake I see parents make is they come up with a list of dream schools. They put names to them without researching the school or costs. First, parents need to figure out what their expected family contribution will be for college tuition. You should focus on what you can afford first. Otherwise you are setting yourself up for a road of ruin.
Tell me more about your heart versus wallet career analogy.
There are kids who want careers that are from the heart but do not make a lot of money. You need to consider this when choosing a college. You can’t assume you will live a great lifestyle with a $30,000 job and $100,000 in college debt. There are a lot of schools that can give your child the skill sets they need for their career without putting you in severe debt.
In next week’s blog, I will share tips Jim shared about FASFA. This is the Federal Student Aid form you need to fill out when your child applies for college. I have heard horror stories from parents about filling it out. Jim makes it easy. If you can’t wait, you can watch my full interview with Jim here.
What tips have you found to help parents save on college debt? Tell us in the comments below.