College Planning 101: Determining the Best College Payment Plan for You
The benefits of college are undeniable. According to EDsmart, college graduates earn more, enjoy more employment opportunities and are happier and healthier than those without college degrees. So, why wouldn't everyone go to college? The answer often comes down to money. Tuition, fees, room, and board can be costly, which is why it's important to have a college savings plan in place and a clear understanding of other ways to pay.
Take a look at the list below for ways people are paying for college and see which is the best option for you:
Financing Options to Help You Create a College Payment Plan
The 529 Account
This account is designed to help you save money to pay for the education of your grandchild, child or yourself. While contributions are not tax deductible, the account's interest earnings are not taxed when you use the money to pay for tuition, education-related fees, room, board, and books. As a side-note, the new tax laws allow funds in a 529 account to be used for private elementary or secondary schools as well.
Financial aid can be a great way to supplement your savings. Many colleges and universities have endowments that can be leveraged to provide institutional aid to aspiring students who meet certain criteria. If you don’t explore your financial aid options, you may be walking away from free money.
Just like financial aid options, there may be scholarship opportunities available for students who meet select criteria. Students should opt in to the selection process for academic scholarships available through the college when they apply for admissions. With a bit of research and time, students can find additional scholarship funds available through private donors and organizations.
According to the Pew Research Center, Americans owed more than $1.3 trillion in student loans in 2017. That's a frightening figure and a good reminder that student loans are not "free money." They have to be repaid and can leave you with debt for several decades if you're not careful. On the other hand, loans can provide you with the financing you need to get through school and start earning a salary. They can be paid off quickly if you are careful and intentional.
Community colleges offer lower tuition combined with lower class sizes and better access to instructors. Choosing a lower-cost option doesn't always mean sacrificing quality, but it can save you a lot of money especially for the first two years of college.
Looking for additional resources for college savings plans and other financial-related items? Read the blogs below, or check out our partner Banzai for free access to financial education resources.