1. Invest for College
Put your money to work for you before sending your child to college. You can invest the funds aggressively in the stock market and other riskier areas when your child is young. As your child gets closer to college age, switch to a more conservative approach to investing to make sure the funds will be available to pay for the additional education. CDs or bonds are the safest investments, but the rate of growth is slower.
2. Participate in a 529 Plan
In 2001, changes were made to the IRS 529 plan you can use to save money for college. Now, you can pre-pay your college education and lock in the tuition rates by purchasing tuition units/years. You save money, because tuition will undoubtedly increase in the future. The money can only be applied to the eligible state-selected institutions and may only cover tuition. If you choose to go to school out of state or at a private school, you get the funds but are no longer locked into the tuition price.
You can also use the 529 account as a savings plan governed by your state. Your money will be invested in a mutual fund through companies approved by the state. Depending on the state you live in, you don’t have to pay state income tax on the money put into the plan, but you will pay federal income tax. When the funds are taken from the plan, the money can be used for tuition, room and board, books, fees, supplies and any required equipment.
Examine the fees charged by individual companies service 529 plans; these charges are not standardized. Some companies charge over 30 percent of the money for the plan in application fees, service charges and other fees. Other companies may charge only a small service fee each year. A 10 percent penalty is charged if the money is removed from the plan and used for non-college costs, unless the student becomes disabled or dies.
3. Get Better Grades
If you put more time in your studies and less time working a low-paying job, you should be able to pull your grades up significantly to graduate with honors. When you become a straight-A student, you can receive an incredible amount of scholarships to attend a state-run college and/or university. Even if just half of your expenses are paid for on a yearly basis, you may be able to save $10,000 a year or more.
About this Author
Anna E. Dyer, BA, LMT, CN, has 10 years of experience as a natural healer and freelance writer. She has counseled hundreds of clients and published numerous written works on natural health, holistic nutrition and various fitness methods. Dyer currently writes a feature article for a women’s fitness magazine and is completing her first book.
