Stuck on college savings? These tips will help you prepare
The idea of saving for college is daunting for most parents and caregivers. And for good reasons: The average yearly tuition and fees range from $10,339 for public, in-state colleges to $38,185 for private institutions. And according to US News, the average college tuition increased for the current academic year over the prior year across both public and private schools. As a result, the cost of college remains a significant financial challenge for many.
Don't succumb to loans that may take decades to pay off. Rather, consider the below tips to help you and your child plan ahead and make the most of the college experience, without having to (literally) pay the price in the long run. These tips start at what you can do during the early years of childhood all the way through the high school years.
Start a 529 College Savings Plan
Save early and often. Tomorrow’s opportunities come from saving today. You’ve heard these sayings before, and they couldn’t be more relevant for families planning to save for college. 529 plans are offered and operated by every state and are designed to help families by setting aside funds for future college costs. Contributions grow federal tax free and are also tax-free when money is withdrawn for qualified college expenses. For Illinois taxpayers, contributions are tax deductible of up to $10,000 per individual or $20,000 for married couples. For Wisconsin residents, contributions made by any Wisconsin adult can reduce their state-taxable income, dollar-for-dollar, up to $3,380 per beneficiary per year.
NOTE: To celebrate College Savings Month, Edvest is offering a $50 bonus for new accounts through Sept. 30.
Make saving a healthy habit
Teach your child the importance of savings by setting a good example and teaching them that money isn’t only for spending – it should be saved regularly, too. In addition to watching savings grow, putting money in the bank also teaches goal setting and the importance of planning. It also helps build security and independence.
The sooner you can teach your kids about money, the sooner you can instill a habit of savings. The 3 Jar Money System is a great way to get started.
High School Years
Take Advanced Placement (AP) courses
Before your student steps on a college campus, he or she can earn free college credits through high school AP courses. To earn AP credits, students must be eligible to take the course and also pass AP testing. Credits can add up and save parents and students money on college tuition.
Complete the FAFSA form
Free Application for Federal Student Aid (FAFSA) is your child’s ticket to receiving financial aid. Completing and submitting a FAFSA form opens the door to potentially receive financial aid, such as federal grants, student loans, work-study opportunities and more.
We recommend filling out the FAFSA form soon after it’s made available. The 2022-23 FAFSA form will be available beginning on October 1, 2021. Click here for more information about FAFSA and to begin the process.
Develop a budget
The cost of a college degree is more than tuition and fees. Plan for personal expenses, transportation, food and more by creating a budget that fits your child’s lifestyle. To help you get started, check out our budget calculator. Understanding and noticing how the small things can influence the final cost of college is extremely important.
Choose an affordable school
Consider a technical school or a community college to help drive down costs. If your student selects a four-year college or university, take the time to apply for grants and scholarships. No matter the decision, make sure you know what you and/or your student will be responsible for paying out of pocket. How much will your monthly payments be after graduation and how long will it take to pay off all student loans? College is a major decision – take time to think about long-term finances. Your future self will thank you.
Apply for scholarships
There are thousands of opportunities, but to help get you started, Scholarships of Northern Illinois is a one-stop local scholarship information source. You can find comprehensive information about local scholarship opportunities as well as information about financial aid.
Need additional assistance? Our Rock Valley Credit Union team is here to help! Schedule a free consultation by reaching out to our Member Contact Center using our chat feature during regular business hours, complete our online form or call us at (815) 282-0300.