Here are some tips to help you plan how to pay for a college education:
•Don't assume your youngster will follow a traditional route. Your kid may have no interest in a traditional college or university education and plans to make a career out of a trade. He may change his mind and attend college later -- or perhaps he's already planning to work for a few years between high school and college. If so, that's not necessarily a bad idea. Students who attend college slightly later than usual may take their studies more seriously.
•Get your child involved. Talk with your child about the financial planning process, as well as the college selection process. From a fairly early age, she might help by contributing to her college fund. If she's interested in expensive schools, plan a financing strategy together. Knowing how much college costs might provide some motivation to work harder in high school, increasing odds of earning scholarships.
•Don't neglect your own retirement needs. If you're saving for college expenses, it doesn't mean you should put off saving for your retirement for 10 or more years. If you neglect your retirement needs to provide for your children, they may end up providing for you much more than you'd planned. Another related concern is that when it comes time to apply for financial aid, any money you've sheltered in IRS-sanctioned retirement funds (such as IRAs) isn't taken into account as assets tap-able for college. At least, that's how the rules work at the moment.
•Don't rule out financial aid. Many people assume that their incomes and or assets will make their children ineligible for financial aid. Even children of people earning six-figure salaries can receive financial aid. Financial aid is big business, with roughly $50 billion being awarded annually. However, be aware that recent allegations of shady practices may bring new regulation that could affect sources of student loans, such as Sallie Mae
For more info on saving for college, drop by the Fool's College Savings Center and check out our book, The Motley Fool's Guide to Paying for School: How to Cover Education Costs from K to Ph.D., by Robert Brokamp.
For lots of tips on how to get your life in order, financially and otherwise, including how to lop off several hundred dollars from your monthly or yearly expenses, try our personal finance newsletter, Motley Fool Green Light. It's full of practical advice that will more than pay for itself in short order.
Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article. Bank of America is an Income Investor recommendation. The Fool has a disclosure policy.
