Financial Planning for College
With the cost of college increasing, it is important to identify things that you and your family can do, in order to ensure that college is a viable option for you in both the present and future. Since you don't want to be left with hefty loans and bad credit, it is important to research and understand various paths that can be pursued, when it comes to making education affordable.
Significance
Thinking ahead is one of the key factors in financial planning for college. If you start saving early, the cost tends to not be as overwhelming. Creating a special savings account for college is a great idea, as education continues to be a sound investment. Setting aside a certain percentage of the money you earn in a designated interval (weekly, monthly) will add up in the long-term. It will also be less money that you may be required to payback if you need to take out a loan. Automatically putting a fraction of your wages and monetary gifts in a college savings account will take away a lot of the guesswork as well.
Features
In addition, there are a number of strategies to consider when trying to fund college expenses. If youare familiar with the market, mutual funds and stocks that have a good chance of growing overtime are something to consider. If you are planning for the distant future, purchasing U.S. savings bonds are another good approach.
The Prepaid Tuition Plans (known as 529 plans) apply to particular states. Alabama, Alaska, Colorado, Florida, Massachusetts, Michigan, Ohio, Pennsylvania, Tennessee and West Virginia offer a variety of prepaid tuition plans where residents can purchase a package or bond at a preset price and pay for it in different intervals. During this process, the state endows the money to gross the variation among the total you are paying and the expected price of tuition for the time that the child becomes of age to attend college.
States like Connecticut, Iowa, Kentucky, Louisiana, Massachusetts, New Hampshire and New York have the College Savings Plan (also known as 529 plans). Such a plan permits the donor to set aside as small or large of an investment they choose, for the educational expenses of their chosen recipient. With this plan, monetary contributions are regarded by the law as gifts and will not have to sustain gift taxes for a five-year period, unless the recipient is given other gifts. College savings plans and prepaid tuition plans can get a bit confusing, as they have a number of rules and vary by state. Prior to participating in one of the plans, it's a good idea to consult with a financial planner, whom is familiar with the programs.
Further financial planning strategies include, educational savings accounts, deduction for qualified higher education expenses and a number of other tax considerations like the Hope Scholarship Credit and the Lifetime Learning Credit (LLC). Both the Hope Scholarship Credit and Lifetime Learning Credit can reduce the amount of tax that is owed depending on the price that was paid for educational expenses.
Types
Students can also receive financial aid from a number of sources, such as the government, state, educational institution and private sources to name a few. Such award can be granted on a need basis (for students who are financially disadvantaged), for good academic standing, extracurricular activities, group affiliation, community involvement, athletics and intended course of study. The Internet makes this process a lot easier. Online, students can access and fill out things like the Free Application for Federal Student Aid (FAFSA) to see if they are eligible for awards including the: Federal Subsidized Stafford Loans, Federal Pell Grants, Perkins Loans, Federal Supplemental Educational Opportunity Grants and work study.
Potential
Although searching and applying for all of the financial aid and scholarships out there is can seem like an overwhelming and time consuming undertaking, it will pay off in the end. The funding and assistance will be less money that the student is responsible to come up with. There are various scholarship, grant and financial aid databases that can be viewed online. Many of these sites help the student determine what awards he is eligible for and give him directions on apply for them. When it comes to college planning, it's important to differentiate between the types of aid and what they require you to do. For example, certain grants, aids and scholarships may require a student to enroll in a certain amount of credits or maintain a specific grade point average. Different loans vary, in terms of what the money can be used for, when it has to be paid back and the interest rate it has.
Identification
Identifying key factors, such as the different expenses (tuition, books, and enrollment), how long the program will take to complete and how much out of pocket expenses you can afford are critical. Creating a budget that includes the above will be useful in identifying the type of financial aid that is best for you. Below are additional resources that are helpful with financial planning for college including an estimated cost of tuition calculator.
Tags: Credit Lifetime, Credit Lifetime Learning, educational expenses, familiar with, Hope Scholarship