This week I’m featuring guest posts by Ellie Kay who is known as America’s Financial Expert. Ellie has been a well-loved speaker at our Hearts at Home conferences. Today’s post focuses on creative savings strategies for future funding of your child’s college education. Don’t forget we’re giving away six books this week! To enter the drawing, simply leave a comment on today’s post!
Before we discuss traditional financial savings plans to pay for college, let’s consider the fact that any way you get college paid for that does not involve a cash investment is more money in the bank for you and your student. The following ideas are ways to pay for a college degree through plans that are available for those who are forward thinking and purposeful in their desire to provide a debt free college experience. We’ve used several of these for our kids and every $1,000 that we don’t have to spend on tuition, college credit, books, room and board is $1,000 that will counter the huge student loan debt that most parents assume as par for the education course. It’s an adage I’ve used before: a penny saved is more than a penny earned—especially when it comes to paying for college!
Here is where some of your child’s giving pays off. When you’ve trained your child to give back to the community, don’t let those good deeds go unrewarded. Organizations such as Teach for America.com The Peace Corps.gov and Americorps.org all offer educational service awards to students seeking cash and a way to make a difference in the world. The best part is that unlike other scholarships and grants, these service awards won’t affect any federal financial aid eligibility. Even if your student has already acquired student loans, organizations including the Army National Guard, National Health Service Corps, and the National Institutes of Health all sponsor loan forgiveness programs that turn borrowed cash into free dough in exchange for post-graduate service.
You can open a 529 account for any beneficiary, or gift money using Ugift into a Upromise Investments 529 plan. If you don’t already have a 529 plan, then you are really missing out because the contributions can benefit from tax deferred growth. Also, gifting into one of these plans may also mean that you can possibly take advantage of your state’s tax deductions. Just check to see if you are eligible for states income tax deductions or credits for saving for college. For example, parents and grandparents can contribute as much as $13,000 ($26,000 if married filing jointly) into a 529 plan without incurring gift taxes. A special rule allows married couples to gift up to $130,000 ($65,000 if single) as long as no additional gifts are made to that beneficiary over a five year period. This also applies to recent college grads who might appreciate a meaningful gift to help pay a student loan payment. Plus, you don’t have to be a parent or grandparent to participate, other friends and family can make contributions to your child’s 529 plan by gifting money or by buying gifts, which brings me to my next point—how to save money by spending money.
Most people, know about Upromise from signing up for their buying program. I’ve been participating for years by going to Upromise.com and then purchasing through participating online retailers. These are stores where I would shop anyway and I get anywhere from 1% to 25% back for the purchases I make. And our family isn’t the only one doing this. Last year, during the holiday season Upromise members received $12 million in college savings rewards from eligible holiday spending. Because membership is free and members have collectively earned $575 million in college savings from purchasing items online or even by buying gas or groceries. I book a lot of travel for my business and often find myself eating out—all these are also included toward my children’s 529 plans.
Double Dipping: College Credit in High School
AP and IB
Several of our kids take Advanced Placement or International Baccalaureate classes throughout their high school semester. These are college level courses that are offered at their high school. At the end of the year, they take a test to see if they score high enough to get college credit. The cost of the test is more than offset by the value of the college credit that will be awarded to your student if they pass. It is important to note that not all colleges accept these credits, so it will be important to check with the admissions office of the college of your choice. A secondary benefit of these courses is that can help students get into college because having AP and IB credit makes for very good resume fodder in college applications. It shows ambition and a good school work ethic. For information regarding your state’s programs, go to the National Association for College Admission Counseling, or www.nacacnet.org
Dual Enrollment Classes
One of the coolest ways to pay for college is to let your local high school district help pay for it while your child is still in high school. Many school districts now partner with local colleges to offer college credit for high school students who take classes at a nearby community college. Consequently, these classes count toward both the high school and college degree requirements. There are thousands of kids each year who graduate from high school one day and then get an associates degree the next day. Talk about a Cha Ching Factor!
Be aware that these programs vary from district to district and state to state. In some cases, the dual enrollment classes take place in the high school during the regular school day. Yet other programs require students to attend classes on the college campus, alongside other college students.
What about you? What is one piece of information Ellie Kay shared about today that is new information for you? Do you have something to add to our conversation?