If you were able to prepare sufficiently for your child’s college education early on by opening a 529 Plan and beefing up your savings then you are in pretty good shape—well, your child is actually. You ought to be congratulated for a job well-done.
However, there are circumstances that force many parents to choose another financial goal over college savings. It could be bringing down debt or getting a house or funding a surgical operation that needs to be paid for a long time. The cases are different for each one and blaming yourself or circumstance for your failure to prepare his college fund will not get your child the education he needs.
When your child is ready to go through college and you have no savings to fund it and don’t want to depend too heavily on student loans, this dream is still possible. Check out how in the sections that follow:
Let your child attend a local college.
The most important move that your kid will have to make is to check out the local community colleges nearby. Since most of them don’t offer on-campus housing, your kid will most likely have to stay at home. This is going to be one way for you to save on your child’s college expenses. Actually, the cost for room and board for your kid attending a college far from home is going to be larger in the long run so letting your child stay at home for the duration of his course is going to translate to huge savings for you.
Consider online education if your kid is disciplined enough for it.
Online education is already getting transaction nowadays. It is cheaper compared to traditional education in an actual brick-and-mortar university. It is also less expensive in other aspects since your kid can stay at home and would only need his computer and Internet connection, taking out the need to commute.
However, online education can only be successful if your kid has initiative and is independent since studies are done in their own pace and time. Most of the time, your children will get their instruction from videos and although they will have to pass requirements, the kind of environment in a physical classroom with the presence of an actual teacher offers a different type of discipline than that provided in an online environment.
Avail of tax credits.
One way to help your child afford tuition in a local community college is to take advantage of the American Opportunity tax credit and the Lifetime Learning tax credit if you qualify for it. Couples who are married filing jointly that have modified adjusted gross income of $160,000 or less can avail of the American Opportunity tax credit. They can expect refund as much as $2,500 annually for four years for each student.
The Lifetime Learning credit is also another benefit that can be availed of if you, your spouse or your dependents are enrolled in an educational institution and you are responsible for paying the tuition. You can get as much as $2,000 in tax credit for this. When you combine both the American Opportunity and Lifetime Learning tax credits, you would be able to cover the tuition cost for your kid enrolled in a full time course in a local community college. If your child stays at home for the duration of the course and does part-time work, you would be able to pull him through college through the family’s combined efforts.
Apply for a scholarship.
Scholarships are an essential part of funding your child’s college education. There are many different kinds of scholarships available that will help finance your child’s educational needs. There are needs-based and merit-based scholarships. Encourage your kid to apply to as many scholarships as much as possible, whether it is small or large. Chances are, your child will be awarded small scholarships, which, when taken together, can largely defray the cost of tuition or of education-related expenses.
Stay in college longer.
A student usually obtains a college degree after four years. However, no one is going to stop your child from studying only half the time and getting his degree after only six years. He can work the rest of the time and finance his studies himself. The benefit is not only financial. After working for a longer time period, your child will have developed the maturity and discipline needed to make him succeed in the workforce.
Determine if your child’s employer provides tuition benefits.
If your kid is already working part time for a particular employer and that work is in line with the course he or she is taking and he sees himself working in the same company for the next several years, then you can ask him to inquire if they offer educational privileges to workers. The companies that do usually require the employee to pay for the first semester using their own money. The employer will then reimburse the money for as long as the employee maintains a particular grade average. The succeeding years are then funded by the employer.
Of course, your kid will have to make sure that he reads the contract governing the benefit carefully. Most employers will require that employees return the service to them by serving for a certain number of years in the company. If they don’t honor this, they’ll have to pay back the company the education costs that they spent while sending the employee to school.
Encourage your children to work part-time to fund college expenses.
Early on, instill in your kid the value of working. There are a lot of opportunities for part-time work for high school students especially in the summer. Encourage them to save their earnings as part of their college funds. When they start studying, they will most likely need to work to finance their tuition and other expenses.
It is very possible to send your kid to college even if you don’t have savings and don’t want your child to avail of student loans. At the heart of this strategy is choosing the most affordable school close to home so that your child won’t have to rent an apartment or stay in a dorm and budget for food and utilities.
In addition to the financial savings that can be had if your child stays home while attending college, another benefit you have as a parent is that you get to stay with your kid a while longer before he finally goes out of the brood. You’ll also know if your kid is having problems while attending college. Your support as a parent will be invaluable in getting him through the rough times at school. No matter how much kids will want to extend their wings and be independent (and you should let them), they will still appreciate your support at times when things are not going well for them.
Tax credits, scholarships and part-time work are valuable in ensuring that your child is able to obtain is degree. In addition to these, you can encourage your kids to be entrepreneurial. They can sell things online through sites like eBay and Amazon stuff that they don’t anymore need and add the proceeds to their college fund. They’ll never run out of things to sell because in today’s interconnected world, “one man’s junk is another man’s treasure.” Pre-loved books, shoes, clothes, bags and other items are wares that they can offer online.
At this time, your child will also receive a lot of credit card offers. They may be excited to sign up so that they can swipe their first plastic. In more ways than one, owning a card is also the final sign that they are getting independent. Nonetheless, advise them to get only one and exercise prudence in using the card. Teach them to make only small charges to the card and to pay the charges on time.
If push comes to shove and you or your child has no other means of funding part of his college costs then obtaining student loans may be an option that he can consider. As much as possible, however, this should not go beyond 10 percent of his total expenses. Paying this back will be quite manageable.
At this point, it’s important for your child to understand the value of budgeting and practical money management. You should instill in him these lessons if he isn’t very prudent with how he is managing his money. When he learns these important concepts early on, finishing college and getting his four-year degree is certainly going to be within reach. Yes, it is going to take a lot of sacrifice and hard work but those who have gone through these difficulties are usually the ones who eventually succeed in the workplace later on in life. Be there to encourage and support your child at this very critical period in his adult life.