Most families don’t have a fully funded 529 savings plan or additional savings for college, which means they’ll need to draw from their current budget or consider additional loans to pay tuition bills.
Locating extra cash isn’t easy. And most of us would rather not restrict our lifestyle, especially if we already have a tight budget.
But experts say tightening spending can be a surprisingly effective strategy, especially if you start early. Even saving while your child is in high school will help.
Carol Stack, co-author of “The Financial Aid Handbook,” says it’s important to understand that financial aid formulas assume that families, including parents, will bear the primary responsibility of paying for college.
Your family may qualify for financial aid, but you’re likely still responsible for your expected family contribution and possibly more. Stack recommends families use the FAFSA4caster calculator as early as when their child is in elementary or middle school to get an idea of expected contribution.
[Don’t fall for these six myths about college savings.]
Costs can spike during teen years with school dances, sports, driver ‘s licenses and college tours. Vicki Beam, founder of Michigan College Planning, recommends parents and kids brainstorm together on cutting expenses to prioritize saving for college. Kids understand the necessity of compromise. “If you work toward a goal as a family, it’s amazing how creative you can be,” she says.
Here are five ways experts recommend families boost their college savings.
1. Delay the license and car: Generally, insuring another vehicle and a teen driver costs more. According to a recent InsuranceQuotes.com study, insurance rates for adding one teen driver increase 78 percent on average.
If your teen isn’t eager to drive, delaying the license or skipping buying your child a set of wheels will save money on insurance, maintenance and gas.
Even if your child plans to pay for expenses, that could be money allocated to college. Which is more important? If you need the extra car, be sure to ask your insurance company about options, and consider shopping around for lower rates.
2. Minimize costly extracurriculars: Colleges value students’ interests and activities, but these don’t have to cost money or detract from college savings.
If your student loves sports for fun more than for the competition, club sport fees might not be worth the cost, particularly if they prevent saving for college. Take a hard look at the expense, Beam suggests.
Perhaps a student can participate by working as an umpire or referee. Some families require their kids to only play school sports — costs vary among districts and may not represent a substantial savings, but it’s worth considering.
And don’t bank on a sports scholarship to pay for college. Competition can be high, and many student-athletes may only earn a partial scholarship, if any money at all.
Consider other ways you can reduce costs for extracurricular activities. Church activities, community involvement, school music programs and volunteer work all count.
Think beyond the academic year, too. For example, one Connecticut-area family discovered that their teen daughter could intern for a summer theater camp, which saved steep fees. Through the internship, she gained valuable experience, the ability to network, volunteer hours and leadership skills.
To learn about internship possibilities, she contacted the executive director to find out what she might be able to contribute to the camp. Don’t be afraid to think outside the box to help your child gain valuable experiences in ways that allow saving for college at the same time.
[Read about how to avoid the college savings mistakes that cost parents money.]
3. Suggest employment: Working at fast-food restaurants or clothing stores might not appeal to students, but admissions officers value high school employment. Jobs allow teens to gain valuable experience and earn money as they go.
Stack says you can also consider hiring your teen for such tasks as cleaning your gutters, assisting with elderly parents or providing after-school care for younger siblings. Have your teen save that money for college or use it to pay for his or her high school activities. You can also put away the additional money you save with your teen helping.
Remember that colleges value grades and test scores, Stack says, so make sure your student is balancing part-time work and his or her studies.
4. Strategize college tours: It’s easy to drop a lot of money while visiting different colleges. Consider structuring vacations around your teen’s colleges of interest. As a cost-savings measure, your student can take virtual tours and review college websites to learn about campuses.
They can also use social media to dig deeper. For example, look for a specific department or sport’s Facebook page rather than relying on the college’s general Facebook page. Save your money and instead visit an expensive or faraway college after your teen is accepted and you have a financial award in hand.
“Too often, visiting equals falling in love, and when you fall in love you start making bad financial decisions,” Stack says.
[Save $90K in high school for college.]
5. Skip the restaurants: Families often enjoy the simple pleasure of dining at a restaurant, but eating out or ordering in can add up quickly. Consider ways you can bond as a family at a lower cost and then put that saving toward your child’s college fund.
For example, Beam knows of a family who prepares meals together on Sundays, with one child prepping the ingredients and the other serving as the sous-chef. The family is saving money for college, and as an added bonus, they’re feeling healthier by eating out less.
The key to any college savings plan is socking away the money you find. This may require making some hard choices, but remind your student that the goal is paying for college. Spearheading the college financial conversation early helps students get on board.
Trying to fund your education? Get tips and more in the U.S. News Paying for College center.
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5 Ways to Find Money for College Savings originally appeared on usnews.com
