Attending college is an exciting milestone, and with the right financial plan, it can also be an affordable one. Whether you’re a student preparing for your future or a parent helping your teenager get ready, taking proactive steps now can make a significant difference. From saving early to finding ways to cut costs and earn extra income, there are plenty of ways to make higher education more manageable without breaking the bank.
Fortunately, you don’t have to have it all figured out at once. Small, consistent steps – like setting aside savings when you can, looking for scholarships, or finding creative ways to lower expenses – can add up in a big way. With a bit of planning and the right approach, you can make college more affordable and set yourself (or your child) up for success without unnecessary financial stress.
Open a Dedicated Savings Account
One of the easiest ways to start saving for college is by opening an account specifically for your education fund. Keeping this money separate from your other savings helps prevent accidentally spending it and keeps you focused on your goal. Even if you’re starting small, every dollar counts. The sooner you begin, the more you’ll have when it’s time to attend college.
To make saving effortless, consider setting up automatic transfers. This tool allows you to designate a specific amount to transfer to your savings account on the date of your choosing. Whether this account is a stepping-stone or your primary college fund account, the key is to start now and build the habit. Over time, those small contributions can make a substantial difference.
Earn College Credit in High School
Enrolling in select Advanced Placement (AP) classes or College Prep (CP) courses while in high school can help students get ahead in their education. These courses may count toward college credits, reducing the number of courses needed to fulfill their major requirements. The fewer classes needed, the lower the cost of tuition.
Students may even be able to graduate ahead of the typical four-year timeline. Take time to meet with high school counselors and college admissions advisors. They can help students select the best course options based on their intended college and career path.
Explore Financial Assistance
Free money is always better than borrowing! Research the financial assistance programs available to you or your student. Explore scholarships, grants, and other financial aid opportunities. Some organizations and businesses, particularly local ones, offer scholarships or other programs to give back to their communities and promote pursuing higher education.
The best place to begin your scholarship research is through teachers, school guidance counselors, or career centers. Local Chambers of Commerce are also great resources for discovering businesses in the area that are awarding scholarships to college-bound students.
Be Smart About Student Loans
For most students, borrowing money to attend college is a necessity. However, that doesn’t mean you need to become overwhelmed with student loans like you often see in the news headlines. There are many ways to incorporate student loans into your college plan without your balance getting out of hand.
First, research federal student loans because these will often have the lowest interest rates and more flexible repayment options. Then, set a limit on how much you borrow. For example, just because you’re approved to borrow $20,000 doesn’t mean you need that much. Remember, every dollar you borrow will accrue interest over time – only borrow what is necessary.
Consider On-Campus Employment
Many colleges offer various work-study programs that allow students to earn money while gaining valuable work experience. Students may even luck out by securing a work-study opportunity that provides career-relevant expertise, giving them an upper hand when entering the job market after graduating.
On-campus jobs offer flexible schedules since supervisors consider students’ class times, making it easier to balance work and school. Students may even be able to knock out some studying and homework on the clock if it’s a slow shift! Contact the school’s financial aid office to inquire about available on-campus opportunities.
Apply for Off-Campus Jobs
If you or your student cannot secure a coveted on-campus job, all hope is not lost. There are likely plenty of employment opportunities available off-campus with local businesses. In college towns, most companies experience steady turnover as each batch of graduating students leave and incoming students arrive, which means they regularly hire new employees.
Paid internships are another opportunity to earn additional income. Internships can provide valuable experience, networking opportunities, and sometimes even tuition assistance. Some employers may even offer tuition reimbursement programs so students can recoup some of the costs of pursuing education.
Remember, every dollar you earn while at school helps to offset how much you need to borrow. Even small part-time jobs can significantly reduce your loan burden once you graduate.
Stay Local to Cut Costs
When you begin researching colleges, you’ll instantly notice the annual cost can be astronomical! However, if you remove the room and board and meal plans, the costs are significantly lower – often tens of thousands less per year.
If feasible, consider attending a good university close to home. Your financial costs will likely be cut in half or even more. If you prefer to attend a school that isn’t local, staying in-state will still help keep your overall college costs down.
Finally, if you prefer to go out-of-state for school, consider completing your introductory and general education courses at a local college that is more affordable. Then, transfer to the desired school to complete your degree.
Utilize Education Accounts
If your child is still young, consider using tax-advantaged education accounts to save for future school expenses. These accounts provide tax benefits and serve as an official vehicle to save for college-related costs.
- 529 Plan: A 529 Plan is a tax-advantaged savings plan designed especially for higher education expenses. These plans allow savings to grow tax-free, and funds can be used toward tuition, fees, books, and even room and board. Some states offer tax-free withdrawals for qualifying school-related costs – providing even more savings. Plus, there are no income restrictions.
- Education Savings Account (ESA): An ESA, commonly called Coverdell ESA, offers tax-free growth on your savings and tax-free withdrawals for qualifying purchases. Funds can be used to cover various education expenses, even for K-12 schooling and uniforms. Depending on your state, ESAs may have lower contribution limits than 529 Plans. Potential income restrictions may also apply. Some people prefer ESAs to 529s due to greater flexibility in how funds can be used.
Note to Parents:
Many parents want to help their children with college-related expenses. While this is admirable, you don’t want to do it at the cost of saving for your own retirement. Secure your retirement contributions first. Then, if you have money left over, consider contributing to your child’s college expenses.
Remember, you can always help your child pay off student loans down the road. However, you cannot finance your retirement.
We’re Here to Help!
Preparing for college is an exciting journey, and with the right financial plan, it can also be an affordable one. By setting up a dedicated savings account, exploring scholarship opportunities, finding ways to cut costs, and earning extra income, you can reduce the financial burden and focus on your education. The key is to start now – every small step adds up. With some planning and smart money choices, you can make college more manageable and set yourself up for a strong financial future.
If you want to learn more about savings options to start a college fund or want to speak with a financial advisor about tax-advantaged plans, we’re prepared to help. Please stop by any of our convenient branch locations or call 800-782-4899 to schedule an appointment.
Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.