4 Ways of Funding Childrens College Education

Funding your children’s college education is among the popular financial goals that parents set for themselves. Since this can be a huge investment, it is worth the time to carefully plan so that you can ensure that whatever method is chosen, it will be useful. The best way to prepare for a child’s college education is to start planning early – as soon as the child is born if possible. However, not all parents have the desire or the discipline to begin planning at birth. Whatever method is chosen, the aim should be to set aside enough funds to ensure that your children can attend college when the time arises without having any significant disruptions in your financial life.

4 Ways of Funding Children’s College Education

The most common methods of funding children’s college education include savings, scholarships and grants, financial aid and student loans or mortgages.

Savings

Financial institutions offer many different types of accounts specifically aimed at helping parents save for their children’s college education. Usually, the savings accounts offer unique features which make saving attractive, such as higher rates of return. Some parents opt to use cash value life insurance policies to fund a college education.  The popular types of savings plans available are 529 College Plans which allows for the investment of after-tax funds that may be withdrawn tax-free for qualified college expenditure, or Educational Savings Accounts (ESA). An ESA may be opened at any bank, credit union, mutual fund company or brokerage firm.

Scholarships and Grants

Scholarships and grants may prove to be a viable option for funding college in cases where the child is brilliant or is gifted or whose parents do not have the money. The process should involve filling out as many applications as the student is qualified for and preparing them adequately for any possible interviews that may be conducted. Scholarship listings are easily obtained from student service offices or online at sites such as Scholarships.com.

Financial Aid and Student Loans

Once specific criteria are met, students may qualify for financial aid. Students are encouraged to fill out the Free Application for Federal Student Aid (FAFSA) even if they don’t feel qualified for assistance. Bear in mind, however, that the process may be tedious. Therefore, the earlier the student starts the process, the better they improve their chances of success.

Student Loans and Mortgages

Students loans and mortgages should really be last resorts for funding your children’s college education. The competition for student loans is usually stiff, and the interest rates can be very high. That means student loans can be very costly and will have to be repaid even if the student has no a source of income upon graduation. While it is possible to take out a mortgage to fund a college education, the risks of losing your property in the case of default are real.

The best way to fund children’s college education is to start saving early and consistently until your goals are realized. However, if you start late, there are other viable options available. Begin working with your trusted Certified Financial Planner soon for the best results in your college savings plan!