*Special thanks to Laura Heape Brisson for writing this guest post on a very important topic for all families!
Move over Valentine’s Day. The flowers and cards were nice, but don’t forget that February is also Financial Aid Awareness Month. No matter how old your children are, if you’re a parent like me then terms like “college education,” “rising tuition costs” and “financial aid” are enough to make you breakout in a cold sweat. Especially given the fact that despite generally tame inflation rates, college costs continue to rise.
Right now, the total tuition cost of a single year of education at a four-year, in-state public college averages $8,655, up 4.8% from last year. That’s just for one year and that price doesn’t even account for things like book fees, new clothes, dorm room décor, or heaven-forbid out-of- state college tuition.
Financial Aid Awareness Month is a really good time to a take a long, hard look at your child’s education savings plan. Whether you are a brand-new parent or scheduling college visits with your high schooler, read through the three savings tips below to ensure you are financially ready to send your child to college.
- Start Early: I can’t emphasize this enough. Just like saving for retirement, it is never too early to start saving for your child’s education. Starting from the time your child is born, aim to save a little bit each month – even it’s just $50.
- Know Your Options: The good news is that when it comes to saving for your children’s college education, there are now more options than ever. I’ve highlighted a few benefits of one option below: the popular 529 Educational Savings Plan.
- This flexible savings plan has several tax advantages and provides a solid foundation for your child’s college education.
- Currently, as a South Carolina resident, the money you put into this plan is tax- deductible on your state tax return and is tax-free when you pull it out to pay for education expenses.
- Even if your child gets a full scholarship to the college or university of his or her choice, the money in your 529 plan is not lost. You can simply change the beneficiary to a niece, nephew or even to your name – if you wanted to continue your education.
- Check out South Carolina’s 529 College Savings Plan called Future Scholar to learn more!
- Now, let’s do the math using a standard 529 calculator: Let’s say that before your child turns one year old, you invest $5,000 at 6 percent for 18 years. By the time your child turns 18, you will have saved $14,271 toward his or her college tuition. If you save $150 a month in your child’s 529 plan at 6 percent for 10 years, you will have put away $25,149 toward his or her college tuition.
- Investigate Financial Aid Opportunities: It doesn’t hurt to start investigating financial aid opportunities as early as your child’s freshman year of high school. When the time comes, don’t leave any potential financial aid stone unturned. Have your student complete a free application for Federal Student Aid (FAFSA), which you can find online at www.fafsa.ed.gov. Also, look into Federal Pell Grants, the Leveraging Educational Assistance Partnership (LEAP) program, and the Federal Supplemental Educational Opportunity Grant (FSEOG).
There are ways to finance your child’s college education, but it needs to start early and involve careful financial planning for your future. It is always a good idea to talk with your financial advisor about the best savings options for your family.
Laura is a Senior Vice President and Relationship Manager in the Private Client Services Group for First Tennessee Bank’s Charleston office. She is responsible for helping her clients manage all aspects of their business and personal financial lives from everyday banking and lending, to asset management and trust services. A Charleston native and current Daniel Island resident, Laura is married with one outgoing nine-year old daughter.