Even though college costs are rising rapidly each year and could reach $334,000 by 2018, fewer families are saving for it than last year, according to a new survey from student loan servicer Sallie Mae. Just 48% of U.S. families are saving for their children’s college education, compared to 51% last year, MainStreet reports. Families are […]
People are always telling parents to put away money for their children’s college education, especially with the cost of college rising so quickly over the past two decades.
But it’s not always easy.
Between the mortgage, car payments, and other expenses, many parents find it nearly impossible to save money for college. And most aren’t even sure how much to save, especially when they’re trying to save for retirement at the same time.
Reducing college costs doesn’t just happen once the kids have already been accepted. Planning early is the best way to reduce your college costs later on.
In this video from THV11 News, Little Rock Family Magazine editor Heather Bennett shares her five best to reduce college costs while your student is still in high school.
Check out our tips and watch the video to find out more.
With the cost of college rising, many parents are turning to 529 plans to pay for their future children’s college tuition.
These plans allow families to put away money tax-free for future use. Like a 401K or IRA, funds are invested in mutual funds or similar investments.
When your child finally reaches college age, many parents wonder if they should put their entire 529 savings toward their student’s first year of tuition or save some for future years in order to allow the fund to grow even more.
This summer, college students and their parents narrowly avoided a student loan interest rate hike that would have raised interest rates on new subsidized Stafford loans from 3.4 percent to 6.8 percent. The deal set Federal Stafford Loans for undergraduates at 3.85%, Graduate PLUS loans at 5.4%, and Parent PLUS loans at 6.4%.
While college-bound students and their families breathed a collective sigh of relief, the deal came with a catch: student loan interest rates would be tied to the health of the economy. If the economy improves as economists predict, rates would increase in coming years. In fact, rates would likely climb higher than they were this past spring.
For families who have saved for college with a 529 plan, the new deal presents an interesting conundrum. Should you use the funds in your account now to pay for your student’s education or save them for the future, when it might be more expensive to borrow?
A 529 plan is an investment plan that allows families to put aside money tax-free and use it to pay for educational expenses later. It sounds like a great idea, but it’s not the right choice for every family and could actually reduce your eligibility for financial aid later. Read on to learn about the benefits, drawbacks, and things to consider before investing in a 529 plan.