If you’re saving for a child’s education, you may want to get them involved in the process to help them better understand the opportunities and potential constraints. Here are six ways to help you get started.
1. Begin with a conversation. Before your child begins applying for college, ask about his or her goals and talk about finances. Discuss expenses for school as well as who will be covering costs or how they might be split. If you or other family members have contributed to a 529 plan or Coverdell Education Savings Account (ESA), consider sharing them with your child and going through the details of how the funds can be used.
2. Set a budget. As a family, consider setting certain guidelines and limitations for the college experience. Perhaps you have a certain dollar figure you’re prepared to pay or agree to cover the cost of tuition and room and board but ask your child to pay for his or her entertainment expenses.
Having those discussions may prevent disappointment. If your son or daughter gets accepted into his or her dream school, for instance, but later learns the family won’t be able to pay for it and doesn’t want to take out loans, the reality could be difficult to face.
3. Narrow your focus. Identify schools that meet your child’s academic needs and fall within your budget range.
Some universities have a net price calculator on their websites. With it, you can see the overall cost for the school and potential financial aid packages available to identify what your expected expenses will be.
4. Look at financial aid packages together. Fill out and submit forms for financial help, especially the Free Application for Federal Student Aid (FAFSA), with your child. Learn more at https://studentaid.gov/ and be sure to check the college’s deadline for submitting the FAFSA application as they may differ from one institution to another. Also be aware the FAFSA will need to be completed each academic year.
Once you receive notification of acceptance and financial aid offers, go through aid packages with your child to compare them so you both have a clear vision of what the bottom line is and how different aid options are treated.
5. Understand scholarship possibilities. If your child wants to attend a school that doesn’t fit into your budgeted amount, work with your child to identify a strategy to address the shortfall. It may be time to look at other options, or your child may want to increase his or her efforts to identify and apply for scholarships to help cover some of the costs.
To identify additional types of financial aid that may be available, visit https://studentaid.gov/ as well as each university’s own financial aid resource center to identity scholarships, grants, and other aid that may be specific to each school.
In addition, the site TuitionFundingSources.com, sponsored by Wells Fargo, provides a database of scholarships available. After looking through the options together, help your child set up a schedule to apply for ones that are the best fit, paying close attention to deadlines and other requirements.
6. Think about work. If you want your child to be responsible for paying for some, or all, of their schooling, a part-time job may be a good fit.
As a family, you’ll want to decide if it makes sense for your child to work while he or she is at school or only during summer and winter breaks. If some scholarships require your child to attain or keep a certain GPA, you’ll want to weigh the time spent away from academics against the amount of money he or she will earn by working.
Please consider the investment objectives, risks, charges and expenses carefully before investing in a 529 savings plan. The official statement, which contains this and other information, can be obtained by calling your financial advisor. Read it carefully before you invest.