Once the child is born, the proud parents start dreaming about the child’s future. Providing the child a proper education occupies a great portion of their dreams and anxiety about the future of their little cherub.
Now, in recent years, the cost of higher education has skyrocketed to an impossible height and the parents with even small children are already nervous over the thought of how they will be able to bear the costs of their children’s education.
Well, the guide below will help you to chalk out a financial plan to support your child’s education all through her growing years.
The first and foremost part of this planning is to make it clear to yourself, what kind of education you wish to give your child. The answer to this question depends on how much money you have to allot towards educational purposes.
For example, if you want to send your child to a public college, it will be a lot cheaper than the private colleges.
According to certain estimates, by 2008 sending your child to a private college will cost over 34,000. The anticipated cost of a public college on the other hand is around 12,000 per annum.
Now, these figures might have given your heart a solid jump, but believe me, there is no real reason to panic; you have not yet considered the factors of scholarships, financial aid and all other types of subsidies. Even if you cannot bear the entire cost of your child’s higher education, avail the facility of these means to partly pay for the course fees and boarding charges.
Also, consider the various types of financial planning to get through your child’s college years without making the health of your personal finance too stressed out.
The state-sponsored 529 College Savings Plan provides you the best way of setting aside money for the bright future of your child. This plan comes with certain tax benefits as well. To make the most out of it, you have to start as early as possible.
Starting a college fund on your own can also be an option. In the latter case, you have to maintain sincere consistency in building up the fund. It is often advised that to build up such a fund, start with more high-risk, high-gain investment plans; then switch to safer versions of investments as the child reaches high school.
Student loans are another excellent way of fulfilling your dream to make your children really educated. You can opt from these popular student loans like the Federal Perkins Loan, Stafford Loans, or the Federal PLUS loans. Depending on your financial position, choose from among these types of loans that may be obtained through your bank.
Zero coupon bonds are a type of deep discount bonds, the value of which grows at a systematic rate over the years. Invest in such bonds when your child is young only to let them yield a huge amount at the time he or she reaches college.
They also come with periodical cash back, so you can also use them to pay for the annual fees from time to time. By buying them in your child’s name, you will get some tax benefits as well. However, in that case, your child will be deprived of financial aid even if he qualifies for it.
So you see, there are a number of ways to plan for your child’s educational costs. It is advisable that you start saving towards this goal from infancy. Start with a small amount, but by the time the child grows up, the fund will be big enough to transform your child’s ambition into reality.
