While college is a prominent path for youth to consider to become successful, it is becoming more and more expensive. Student debt has more than tripled since 2004, reaching $1.52 trillion in the first quarter of 2018, according to the Federal Reserve — second only to mortgage debt in the U.S.
Read this article by Gene Marks (in the picture on the right), who had to pay USD $110,000 per year towards the college tuition fees of his three kids. It may seem as if the pressures of going to college are only placed on students. However, parents receive much stress, especially regarding finding ways to fund their children’s academic careers. In this article, guest author Sarah Saker writes about the alternatives for parents to pay for their children to go to college.
4 Alternative Ways for Parents to Pay for College Tuition
By Sarah Saker
1. Apply to Private US colleges
The costs to attend college vary on whether it is private and public, your location, and socioeconomic status. International students, transfers and out of state students pay twice as much to attend universities due to the fact that in-state tuition costs are significantly cheaper than out-of-state tuition.
You can weigh your options of colleges your child wants to attend by considering your proximity to the university and what you can afford. You should also consider whether they would like to attend a private or public college. Although public colleges may be easier to get in to, there are options for international students and transfers to attend private colleges at a lower cost.
Some private universities like Stanford, Brown, or Columbia review a student’s economic status and determine whether they are in need of assistance. Whereas, other private universities like Yale and Amherst follow a need-blind policy and do not consider financial status during the admissions process. When comparing financial statuses, it is cheaper for middle-class and low-income families to attend a private college than upper-class or affluent families.
2. Save money in a college savings plan
Saving for college benefits both parents and students in the long run. Creating a savings plan allows flexibility for student choices and safety for parents as there is a significantly lower chance of debt. Although, it’s never too late to start a savings account, begin as early as possible and set achievable goals by breaking the amount you intend to save down into small, monthly contributions. This allows for a gradual and secure plan for your child’s future.
A 529 college savings plan allows you to save and invest your money directly and there are tax and financial aid benefits to enrolling in this plan. Money in 529 plans is tax-deferred as it accumulates and when distributed for qualified higher education, it is not federally taxed. It can be used at thousands of US colleges and universities for room and board, books, and general tuition.
It is important that you start early because the process of saving takes time and effort. To make things easier, consider making your savings automatic so it is not something you could forget to do, occasionally increase the amount that was set to save, and make realistic goals for your plan.
3. Sell services, products online
If you make jewelry, furniture, sew clothing or if you have a service you could share with others, you have another alternative to paying for your children’s college. Monetize your crafts by building an online store and selling those crafts worldwide. Today, this has become an easy way to make extra money without feeling as much obligation you would with a second job.
Hobbies are usually things we do for our own enjoyment, and gaining extra income allows more flexibility with spending and saving. Therefore, college is less of a financial burden on parents and students.
4. Apply for parent PLUS loans, alternative loans
Federal loans should be a last resort when funding school. If your savings plan hasn’t assisted as much with college costs, there is an option to take out a parent PLUS loan, which is issued solely for parents looking to pay for school. Be cautious when considering this option as it has high-interest rates and payments and leads to debt.
Other private loans, like those from banks, are also high-risk alternatives to paying for college. These loans will assist with school expenses but have variable interest rates that are much higher than federal loans like the parent PLUS loan. Research is crucial when it comes to applying for a loan, and rates, repayment options, responsibilities should be taken in to account.
Before taking out parent PLUS or private loans:
- Research fine details on loans
- See what scholarships and grants are available
- Exhaust all federal resources (subsidized loans)
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About Sarah Saker: Sarah is a freelance writer and small business coach living in Hattiesburg, Mississippi.
She loves writing and helping small businesses set up processes for customer support and growth, and working on creative marketing messaging.
Featured Image Credit: CentSai
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