As a parent, one of the biggest challenges you may face is helping your child pay for college. College tuition used to be affordable, so helping your child cover the costs wasn’t an issue. However, the cost of college attendance is at an all-time high, so you might need to look for alternative ways to help your child pay. If you’re looking for ways to help cover the cost, here are three ways you should consider.
Your 401K
If you have a 401K, you might be able to dip into it. You can take out a loan against it and when your son or daughter graduates, they can pay it back with interest once he or she graduates and finds a job. While this solution doesn’t work for everyone, especially if you only have limited funds in the account, it may work if you’ve been contributing to it for years.
Loan Products
Another way you can help your teen pay for college is by being their cosigner. When you apply for a low-rate Private Parent loan, you take on the responsibility of financing their education. This allows them to focus on earning their degree without the added stress of trying to pay for it out of pocket or navigate the often-muddy waters of student loan financing. It’s important to note that you do need to have reasonably good credit, steady income, and give consent to become financially responsible. Also know that if your son or daughter decides they no longer want to attend school, you’re still responsible for any money they received. That’s why is always a good idea to talk about this in depth with your child and be certain they understand all of the possible implications.
529 Plans
If you aren’t familiar with 529 plans, here is a brief synopsis of how they work. You contribute money into the plan, typically in the form of investments or mutual funds. The funds can then be withdrawn without penalty for educational purposes. There are two different types you can choose from: pre-paid and college savings. Each work slightly differently, so you need to weigh the pros and cons of each prior to deciding. Pre-paid plans put the money aside until your child enters college. Then, the account is automatically debited until he or she reaches the set age requirements. The college savings account lets you invest in mutual funds without having to be financially committed before your child is accepted into their chosen school.
Payment Plans
Some smaller community colleges and universities offer payment plans. They usually want to know how much you earn prior to agreeing to enter into this agreement. Based on your finances, they then create a payment plan to make paying tuition easier over a set amount of time. Your son or daughter will also have to maintain their grades to remain eligible.
Retirement Accounts
If you’ve already set up a retirement account, you can also consider making a withdraw. Depending on the type of account you have, you might be able to draw upon it and use it for educational purposes. Be mindful, however, that your specific account might penalize you for making premature withdraws. If so, it might be better to look for more viable solutions that cost less. If you’re account does allow early withdraws, only withdraw the amount you really need to pay for your child’s educational expenses.
Start a Side Hustle
You can plan a vacation without going into debt but funding your child’s education is a significantly greater cost you need to prepare for. If your teen is a few years away from going to college, you could start a side hustle. Every little bit helps so even if you only make a couple hundred a month, it’s still better than none. Whatever you do earn, you can put that into a savings account where it can accrue interest. If you’re not sure what part-time jobs to try, think about what you’d want to do for a full-time job. Maybe you always wanted to work with flowers but never had the time to learn how to make floral arrangements. Alternatively, maybe you always wanted to start a dogy day care but needed a job that paid more. Side hustles should be fun, not something you hate doing. You can even resell vintage clothing online. With a little research and basic marketing skills, you can make a reasonable amount of money by reselling clothes you get at Goodwill or even out of your own closet.
