Saving money for college can be challenging.
Parents have to juggle saving with an endless list of other expenses, while students are stuck working part-time for minimum wage. Either way, financially planning or saving for college can seem like an impossible task.
Paying for college can be a source of anxiety for many families, but there are resources to help put those worries to rest.
No matter how daunting it seems, know that it’s possible to save money and make a dent in tuition expenses. It’s never too late! And the good news is that getting started is the hardest part.
1. Invest in a 529 Plan
If you’re a parent and want to start accumulating money towards your child’s college education, consider investing in a 529 plan.
This is a tax-free tuition plan that you can start at any time and all it requires is a $25-deposit to open. The savings grow along with market returns, making any money invested in the 529 plan increase in value over time.
Even with a late start, any amount accrued is money that doesn’t have to be borrowed in the future, which saves a lot in the long run.
2. Save as a Student
If you’re a student, you should start saving money as soon as you start working.
Although it might not seem like you’re saving enough, every little bit you amass can go toward auxiliary costs (not to be confused with luxury costs).
A semester’s worth of books can cost around $600 to $800. If you can avoid borrowing money for books, then that’s one fewer loan you will have to pay off later!
Working during the school year — whether through the federal work-study program, a regular job on campus, or at a local restaurant or retail store, can help grow your savings and prepare you for paying off your student debt down the road. And don’t forget about the value of side hustles. There are also ways to make some extra cash, even as a student.
3. Cut Back on Unnecessary Expenses (Whether You’re a Parent or a Student)
Yes, we all enjoy purchasing a fancy coffee drink now and then (vanilla iced café latte with extra whipped cream and a sprinkle of cinnamon, anyone?).
But, if that’s an everyday expense, you’re probably spending more money than you think. Instead, put that money towards college savings.
For example, let’s say you buy a fancy coffee drink five days a week for a minimum of $4 a day. That totals to $20 a week, which equals $80 a month and $960 a year! That $960 could easily cover a semester’s worth of books.
Sock away $960 each year for four years, and that’s $3,840 saved for college. Imagine how far that $20 a week could take you if you started a 529 plan?
A lot further than that fancy coffee drink, that’s for sure.
4. Apply for Private Scholarships
Students can apply for private scholarships, which are typically based on interests, skill levels, unique strengths, or sometimes, personal characteristics (Google “scholarships for redheads”).
Fastweb is a great resource for you to search and apply for these types of opportunities. If you’re working, check to see if your company offers scholarships.
Or research whether or not you can apply for a scholarship through your bank. There are billions of dollars in funding available through private scholarships.
Don’t miss out on free money!
5. Make a Household Budget & Stick With It
Once your child goes to college, try to maximize your payment plan instead of borrowing.
Create a household budget and ask yourself, “where am I spending too much?” Avoid eating out every night, pack lunches, and make coffee at home (no fancy drinks — see No. 2, above).
We’re not telling you to stop having fun. Make eating out a once-a-week occasion. Treat yourself to a cup of coffee when you need a pick-me-up. But, also, be aware of your spending and savings, and how that might affect the college fund.
6. Meet with a Financial Planner if You’re a Parent
If saving money for your child’s education feels too overwhelming, sometimes it is best to seek the expertise of a professional.
People often put off consulting with a financial planner because of fear of being judged or rejected. Of course, it depends on the company, but most financial planners are eager to help, no matter the financial situation.
Financial planners can help establish a 529 plan or figure out a different plan that works best for your lifestyle.
7. File the FAFSA Early (For Both Students & Parents)
The Free Application for Federal Student Aid (FAFSA) opens October 1 each year and we suggest applying as soon as possible. Financial aid, such as federal work-study, are distributed on a first come, first-serve basis.
The FAFSA helps colleges and universities determine financial aid decisions, which could include scholarships, grants, and loans. The sooner you apply, the sooner you will receive a decision, and the sooner you will know how much you need to start saving.
H2: Looking for Help with Planning for College?
Truly, the key to saving money for college is to start saving money for college!
There are plenty of ways to establish a college fund, but if you need help figuring out the best path, view our financial aid videos on all things FAFSA.
The Financial Aid King or one of his expert colleagues are happy to walk you through it.
