Paying for College
by Joyce Dutton
http://www.laconcollege.com
Paying for a childs college education is one of the biggest
expenses that parents will face in their lifetime, other
than perhaps buying a home. Because of this, parents should
take action early on and begin planning and saving when
their children are newborns in order to make the most of
their savings as well as eliminate any excess financial
burdens from waiting until the last minute. There is a time
scale of planning that parents should follow from 15 years
until college until the day of college. This plan is very
helpful and should be followed if at all possible.
When college is 15 years or more away you should start
saving for your childs education. Or, if you dont have
children yet but are planning on having them, go ahead and
start saving to really maximize your savings. However, at
the 15 year to college mark you should open and education
IRA as well as make some investments that are more
aggressive. Now is the time for aggressive investments, not
later. So, if you want to invest in aggressive mutual funds
or the stock market, do that now and as each year passes get
a little more focused and more conservative. The point is to
save money not necessarily make money, although if you can
do this that is great as well.
When college is 10 15 years away you should begin
organizing your portfolio to ensure you are on the right
track. Also, any aggressive investments should be moved into
more conservative funds if possible. During this time period
you can also look into your states different plans for
college savings as well as any tax breaks offered for this.
Many colleges are starting to offer prepaid college plans,
so this could be an option during this time as well if you
prefer to make payments over a long period of time.
At the five to 10 year mark, you will need to start moving
your money into different accounts or bonds. For example,
bonds are a good option as well as fixed income. If you are
unsure, talk to a financial planner to help you make the
decision.
When there are only five more years until your child enters
college, make sure your investments are safe and secure and
not in any aggressive funds. This is the time to guard the
money rather than risk it on aggressive markets.
If you realize that even though you have been saving for
more than 15 years, you will not have enough money to pay
for your childs tuition, you can consider different student
loans that do not need to be paid back while the child is
enrolled in school and that have low interest rates. There
are loans available for the parent as well as the child, so
whatever works for your family is the best option.
As you can see, when you start planning and saving early,
the idea of paying for college is not nearly as frightening
as waiting until the last minute.
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