College Planning 101
College planning is a necessary part of life for anyone who wants to work within an advanced profession. Careers in fields such as medicine, education, engineering, law and politics typically require workers to have some type of college background. Many companies, firms and government organizations are not asking people to be college educated for no reason. They want competent, knowledgeable and capable people on staff. The bottom line is that a person should start college planning as soon as possible. They should also figure out the best way to pay for their education. The information presented here will reveal the best ways to plan and pay for college.
Parents should Save for their Child’s Education
Parents are instrumental to their child’s college education. Fathers or mothers should start saving as soon as possible for their child’s college tuition. There are a number of ways that parents can save They can open up a simple bank account and put money aside for 18 years. They can even use more advanced savings and interest plans to put money aside for their kids. Many of these plans will be listed below.
The Free Application for Federal Student Aid (FAFSA) form is made available to consumers by the government. This form is used for federal loans and grants. Parents can use the FASFA form for their children that are 18 and under. They can also fill it out for children that they are still claiming as dependents if they are over 18. Students that are 18 and over can fill out the forms themselves. Many universities require students to fill out a FASFA form as a part of their financial aid package. More information about loans and grants will be presented below.
Most people who attended college (including me) received grants from the government. These endowments are known as Pell Grants and a person typically has to fill out a FASFA form to get them. Grants do not have to be paid back. There are different types of grants outside of the types that the government provides. These grants come from organizations and other groups.
Most grant sources are limited and people often have to apply early to receive grant money. There is also a lot of competition for most grants since it is free money. A person might be required to fulfill certain obligations or to meet certain requirements to get one.
Most people might not like to admit this but loans are arguably the most common way that people pay for school. College is expensive and many people will probably end up taking out a loan to cover costs. FASFA applications can be used to acquire loans and loans can also come from any source that is willing to risk their money on a student. A student that takes a loan should remember that they will have to pay back this money. Therefore, a borrower must be wise about the amount of money that they receive from a lender.
529 College Savings Plans
The 529 college plan has been around for a while but not too many people are aware of them. A 529 plan is an advance savings account. It allow people to save their money in a tax-free account. This account must be set up qualified college expenses. This type of plan does not have an income limit nor does it hinder contribution amounts. Tax benefits are included in the 529 plans. People can start this plan at an early age for their children and watch it grow with interest over the years. The only thing that a person cannot do is take the money and use it for non-college purposes. Otherwise, they will be penalized.
People can get into college based off of merit. In other words if they perform well academically or are gifted in a field they can receive funding form a school. This type of scholarship is often used for highly intelligent students in the science and technology fields. Funding that is given to students is based on academic performance or some other type of talent. Places such as employers, service organizations and outside scholarship providers typically provides this type of funding for students.
Gerber College Fund
The Gerber college fund is a life insurance policy for kids that can be used for college once they mature. Parents use this policy to build up savings over the years. When their child turns 21 they can then take over the policy. Remember that this type of policy works off of a cash value format. That is the policy can be used as a form of personal funding after a certain amount of time. Parents can cash this policy in once their child is ready to go to school.
Some students take advantage of the Federal Work-Study program. This program allows financially challenged students to work within the local community and at a job related to their major so they can earn money to cover college expenses. Students who use this type of funding can only work part-time. It is also available for undergraduate, graduate, and professional students with a low income.
Working a Regular Job
Many college students work a full time job and go to school. It is not an unusual thing to do. This is a great way for young adult students to take their education seriously since they are paying for it. Working a job to pay for college helps to reduce many expenses and gives students more freedom with helping to resolve their tuition expenses.
College Tuition Tax Credits
The federal government has a tuition tax credit program that can be used to reduce the amount of taxes owed if a person meets specific conditions. This credit allows students or their parents to subtract the amount of money they owe for schooling from their taxes within a given year. The credit amount will vary and there are rules for using this incentive. The IRS will have more information about this form of tax credit.
Kids and Roth IRAs is another option that can be used. Parents have to put money into an IRA early on in their child’s life. They cannot take money from this account otherwise they will be penalized. This type of plan is great as long as parents and their children have the discipline not to use the money for non-college purposes. There are rules for using an IRA and parents mus contribute to the account. Minors can only contribute to a Kids IRA if they made enough taxable money within a given year from a standard form of employment. Custodial accounts work in a similar way to Kids or Roth IRAs but they do not have restrictions and children can take them over once they reach 18.
Here are the options for college funding listed in order as they appeared:
*529 College Savings Plans
*Gerber College Fund
*Working a Regular Job
*College Tuition Tax Credits
A college savings plan is not an easy thing to do because saving money for most people is difficult. However, it must be done early on in life otherwise it will be harder to do as a child gets older. There are some special college funding options such as the college for financial planning. The bottom line is that funding is available and students have many available options. This means that there is no excuse for a person not be able to pursue an advanced career to improve the quality of their lives.