“Education is not preparation for life; education is life itself.”
As true as that is, the fact remains that your quest for quality education can leave you with lifelong debt as well.
Be it public institutions or private, educational expenses can become a burden especially when you consider going to a grad school. On an average, attending a private college in the US costs about $45,000 annually, while attending an in-state college costs about $25,000 a year. You are, therefore, likely to be forced to apply for a loan.
So whether you are an eager-to-learn, high school student looking for ways to gather enough funds for your college, or a parent wanting to ensure a bright future for your children, you have to start considering ways to afford college fees well beforehand.
Although scholarships waive up to 100% of the fees, needless to say, they are limited by their very nature. Relying on an opportunity like that alone is like walking on thin ice that might break at any time. You definitely don’t want your dream of attending college to shatter just like that, do you?
It’s always better to not put all your eggs in one basket. Here we have presented the top three ways you can save money for your future studies.
1. 529 Savings Plan
The 529 Savings plan has become increasingly popular, which is proof of how beneficial this college savings plan is. These plans are generally run by the states, allowing parents and even grandparents to deposit a certain amount for their children’s future college expenses.
They can be utilized at any accredited college in the US. Moreover, they have added advantages such as providing tax cuts, and they can also be transferred to another recipient in case the original receiver decides not to go to college or not to use them.
Another beneficial feature of this plan is that apart from tuition fees, the funds can be used for other college essentials like books, supplies, and boarding. Since it is open to contributions from anyone, this plan is the most flexible savings plan available.
2. UGMA or UTMA Accounts
UGMA (Uniform Gift to Minors Act) or UTMA (Uniform Transfer to Minors Act) accounts are accounts set up by parents in name of their children. They can deposit in these accounts over the years and name any person of their choice as the custodian of the account. Although the first approximately $1,000 will not be taxed, further additions will be taxed at your child’s income tax rate.
The plus point of these accounts, or maybe the downside, depending on the case, is that upon reaching the legal age, the ‘minor’ can use the funds at their own discretion, i.e. for any purpose and not just for college expenditure. Also, these accounts cannot be transferred to another person.
3. Student Jobs
If you are a high-school student, this option is for you. While the above two saving options are dependent on your guardians part, this one is entirely in your hands.
To build for your college expenses, you can start working part-time during your school years and save the money you earn. Or you can work full-time during summers and any other vacations. Over 3-4 years, this way you have the potential to earn at least a few thousand dollars. Although it may seem insignificant compared to the total cost, it can give you an edge over other students once you are in college, and eventually help you get a better paying job owing to your past work experience.
Therefore, the golden tip is to start saving from an early time. The sooner you begin, the more you will be able to compound over the years. When is the right time, you ask?
Well, it’s NOW!