If you got a late start on college savings or saw your
investment portfolio dwindle in the latest economic downturn,
don
’t despair. The California Society of CPAs (www.calcpa.org) says
there are ways you can save money and obtain the funds to make it
possible to meet those ever-rising tuition costs.
If you got a late start on college savings or saw your investment portfolio dwindle in the latest economic downturn, don’t despair.
The California Society of CPAs (www.calcpa.org) says there are ways you can save money and obtain the funds to make it possible to meet those ever-rising tuition costs.
SAVE, SAVE, SAVE
Depending on how much time you have before enrollment, redoubling your savings efforts may enable your child to close all or part of the gap between your resources and tuition bills.
And, by continuing to tighten your belt during the college years, you may be able to foot at least part of the bill through current income.
You can also schedule your tuition payments in a way that suits your budget. Many schools offer a tuition management service that, for a fee of about $50, allows you to spread the school’s annual tuition into eight or ten monthly payments.
FINANCIAL AID
Financial aid is also an option. Financial aid packages are sometimes negotiable, particularly when there has been a drastic change in your financial circumstances since you first applied. If you’ve lost your job, incurred high medical expenses, or experienced some type of financial hardship, write a letter to the school explaining the situation.
SCHOLARSHIPS
Your son or daughter doesn’t have to be a straight A student or a star athlete to qualify for a scholarship. Many are available to students with special interests or skills.
For example, scholarships are available for Swedish Americans who play the oboe and camp counselors who plan to study special education. Of course, these scholarships aren’t always easy to find.
The Internet is a good place to start. If your child is still in high school, the school’s college guidance counselor may be able to help.
GOVERNMENT LOANS
Although some parents are reluctant to take on additional debt, federal student loans can be a relatively inexpensive source of education funds.
Federally funded PLUS loans allow creditworthy parents of college students to borrow up to the full amount of tuition. The interest rates on PLUS loans are variable with a 9 percent cap and you must begin repayment 60 days after the funds are disbursed.
Stafford loans are available for students. A freshman can borrow $2,625; the maximum loan amount increases to $5,000 by the time your student is a junior.
In most cases, repayment begins six months after graduation. If you expect your child to bear part of the monetary burden, this may be a good option.
A word of caution from CPAs: do not use retirement savings to pay college tuition bills. More resources are available for funding an education than for financing a retirement.
In addition to the tax implications of withdrawing from retirement savings, you’re giving up the valuable earnings.
CPAs recommend that you first look at alternative arrangements for your child or, as a last resort, postpone college for one more year until you have saved sufficient funds to meet all or part of the tuition bill.
Bill Spaniel is the Public Relations Manager for theCalifornia Society of CPAs. He can be reached at 818-546-3552 or at bi**********@ca****.org.
