Smoothing the Financial Path to College: A Practical Guide for Parents
June 15, 2023
Sending a child off to college can feel like a leap into the unknown for everyone involved. The excitement of your kid embarking on a new life journey might be tempered slightly by the knowledge that significant costs must be shouldered to make it happen. Fortunately, there are effective ways for parents to help fund their child’s college experience without upsetting their own financial stability. Let’s dive into some of them.
The first step in any journey is preparation. Just as you wouldn’t head off on a cross-country trip without packing your bags and planning your route, preparing for your child’s college expenses requires similar readiness. Start by creating a savings plan as early as possible. Even if it’s a small monthly amount, every bit helps, and you might be surprised by how much it grows over time.
A 529 plan 1 is a tax-advantaged vehicle designed to encourage saving for future education costs, and this could be a great option for you. Also, consider incorporating college savings into your budget. This can mean repurposing money from another area — such as your allotment for dining out or other entertainment — and putting it into the college fund.
Next, take a deep dive into available resources. Scholarships, grants, and work-study programs can provide considerable help in funding college education, so encourage your child to apply for as many as possible. And don’t forget about the Free Application for Federal Student Aid 2 (FAFSA®), a government program that can also provide access to grants, loans and work-study funds.
If you’re an Affinity Federal Credit Union member or thinking about becoming one, there’s more good news. We offer a wide array of tailored products that can help finance your child’s education.
For instance, our award winning high-yield SmartStart Savings 3 account comes with no monthly account fees or minimum balance requirements and enables you to earn 4.00% APY on the first $10,000 and 1.00% APY on every additional dollar.
An Affinity home equity line of credit 4 (HELOC) could be an excellent choice as well if you’ve built up equity in your home. This flexible loan type allows you to borrow as needed, typically at a lower interest rate than credit cards or personal loans. It’s like having a safety net you can access at any time for college-related expenses.
Remember, your financial stability is just as important as your child’s education. With the right preparation, resources, and loan products, you can manage both effectively. Being an Affinity member means you’re not alone on this journey. We’re here to provide financial advice, tools and connections that will help you support your child’s future while maintaining your own.
This information is for informational purposes only and is intended to provide general guidance and does not constitute legal, tax, or financial advice. Each person’s circumstances are different and may not apply to the specific information provided. You should seek the advice of a financial professional, tax consultant, and/or legal counsel to discuss your specific needs before making any financial or other commitments.
1 Retrieved from: https://www.sec.gov/about/reports-publications/investor-publications/introduction-529-plans
2 Retrieved from: https://studentaid.gov/h/apply-for-aid/fafsa
3 Retrieved from: https://www.affinityfcu.com/personal-banking/banking/savings/smartstart-savings
4 Retrieved from: https://www.affinityfcu.com/personal-banking/borrow/mortgage/home-equity