How to Save More Than $18,000 and Avoid Personal Loans While Your Children Are in College
For all parents, paying for their children’s college is one of the most important challenges of their lives, especially if they want to help their children get as further ahead as possible in their lives and careers.
In order to stretch out their savings as much as possible and avoid applying for personal loans, one of the methods that is helping parents a lot is to have their children living at home during their at least first two undergraduate years. The math to explain just how much this can help parents is fairly simple: The average amount to pay for a room and board last year was of $9,340. By this estimates, having a child living at home for at least the first two years of college could save the parent the impressive sum of more than $18,000.
All of this with average numbers in mind. If your children go to colleges were costs are higher, then naturally, the expenses will also be higher.
If you are one of those parents that want to jump start your savings for your children’s college by making them stay at home, here are four important tips to help you do just that.
1. Learn to set educational goals in order to avoid unnecessary spending:
While their kids still live at home, one of the main missions of their parents should be to thoroughly discuss with them their career goals and the specific credits needed to achieve them.
The reason for this is that is your children don’t have a career goal, then they might start experimenting with several different subjects that might not be that necessary in the end. All of these subjects of course will cost more, creating a direct impact on any savings that you might have. Another side effect of this is that the longer you children take to finish college, the later they ill incorporate to the job market.
To avoid this, what you and your children need to do is to map out their full career plan with their college counselors, including exploration options that will only make sense for their career paths.
2. Keep money invested to increase your earnings even during school:
Most parents typically have a 529 plan funds, so instead of using them to cover for grad school or for college early on, they should try to avoid tapping on them for as longer as possible and choose instead to keep their money invested, allowing them to save during those first two years of their children’s college.
In theory, this should give any 529 plans a lot of additional time to grow tax free (only of course, if the funds are used for educational expenses). Also worth noting is that this measure will only work if the children end up attending graduate school eventually.
3. Using grant funds appropriately:
In order to prevent losing any benefits, those parents who live in states offering 529 plan matching grants, should start using the funds as soon as possible, otherwise they risk losing their matching grants (which are only payable to a university) unused if their children choose not to attend college for some reason.
4. Watch your kids’ student loans:
More often than not, some students living at hometend to borrow funds that they don’t need in their entirety when applying for personal loans or student loans. Fo example, a student can gets a $2,000 student loan refund check, which they will use to buy textbooks that will cost $400 at the most. With the $1,600 left, the student then starts to buy music downloads, video games and extra clothing. At the end of four semesters, it turns out that the student now owes more than $6,000, most of which was not necessary.
In order to avoid this, parents should talk and educate their kids about how to manage student loans appropriately.