Many people consider a college education an absolute necessity, but the costs continue to escalate, making paying for college increasingly difficult. Fortunately, help is on the way.
College can be expensive or it can be very expensive. With that said, you must plan your child’s education carefully. Having a good roadmap of your final destination and how you want to reach it is the purpose of the planning stage. Do you want your child to go to a public or a private university? How much time is there until your child actually goes off to college? How much money can be invested between now and then? Once you get a rough picture of where you want to be and when it will be easier to determine how to get there.
Hopefully, you have started to plan well before your child actually goes to college. There are three key sources of money from which your child’s college education can be financed. The first source is derived from investments. Starting early by investing what you can now and continuing to add to those investments each month can make a big difference down the road.
The next key source of income comes from grants and scholarships. Nothing is better than receiving free money for your child’s education. Grants and scholarships are the best sources of funding for college because they are usually tax-free and don’t have to be repaid. Although it may be possible to finance a large portion of the costs of college through grants and scholarships, the many variables involved in securing a scholarship make this source of income highly unpredictable. So finance as much of the education as you can with grants and scholarships, but don’t count on them as you begin to invest.
After investing your money and securing as many grants and scholarships as possible, a portion of the college expense may still be left to pay. There are state and federal loan programs to help you pay for the remainder of the college expense. These loans should be a last option for financing, after the other sources of financing have been exhausted since they will have to be repaid after your child graduates.
Many options are available to help ease the burden of paying for college; the best plan is to utilize several of them together to cover the entire cost of college. The following sections go into detail on these three key sources of money and should get you acquainted with the entire process. After learning the basics of paying for college, we recommend hiring a professional financial planner to further plan your child’s education.