How do we plan on paying for college? We have 529 College Saving Plans in place for the boys and have been contributing to that every month since the boys were born. It’s money that we don’t miss now, and will be happy to use for the boys’ college when the time comes. Scholarships are wonderful because it’s an award of free funds for college that do not have to be repaid ! Scholarships may be awarded based on any number of criteria including academics, achievements, hobbies, talents, affiliations with various groups, or career aspirations. It’s never to early to start looking at potential scholarships. What are some other ways to save for college?
The following is a guest post by Hilary Smith with some great ways to Save for College, some you probably never heard about or considered!
You may occasionally hear someone scoff, “I didn’t have to rely on someone else to pay for my college. I pulled myself up by my bootstraps and worked my way through.”
That doesn’t work anymore. Why? Look at the numbers: Between 2004 and 2014, tuition rates increased at more than double the rate of inflation. In this age, your child will greatly benefit from any money you can set aside to invest in his or her educational future – and there are plenty of ways to do that! Let’s look at ten of the least-known options for college investing.
- Open a Coverdell Education Savings Account. You may have maxed out your main IRA contributions already, but you can still set aside up to $2,000 per year, per beneficiary, for future education expenses. This account can pay for every education-related expense you can imagine including tuition, room and board, books, and supplies. However, in order to open or contribute to a Coverdell ESA, your gross annual income must be less than $110,000.
- Open a 529 College Savings Plan. What you put into this fund will be earmarked for college expense. Money from the plan can be withdrawn, tax-free, to pay for expenses at nearly any college, university, or graduate school in the nation.
- Try Upromise. Upromise lets you shop online at participating retailers and receive cash back, which you can funnel directly into your 529 College Savings plan or any bank account. You can also open a Upromise MasterCard account and gain rewards on all purchases made with your new card.
- Get cash back. Even if you don’t use Upromise, you can still use your credit card’s cash-back rewards program to supply your child’s college savings account with cash while you pay bills and buy groceries. If your current card doesn’t have a cash-back rewards program, find a card that does!
- Check out the Monetta Young Investor Fund. This mutual fund marketed toward those saving for college – but it sets itself apart by offering a unique component: tuition points, which accumulate over the life of the account and can be redeemed at over 340 private colleges across the nation.
- Invest in diamonds. This can be an exciting and lucrative investment if you know what you’re doing! Learn everything you can about the business and start buying and selling. If you prefer tangible assets over digitally represented assets, this might be a great option for you as you save up for your child’s future college expenses.
- Share the wealth. It’s called “Peer to Peer Lending” and gives you, the investor, an opportunity to loan money to borrowers while receiving interest payments. The borrower will receive the funds and be put on a payment plan. And with each payment a portion of the lent funds, plus interest, is returned to the investor.
- Buy tuition now. In the 2015-2016 school year, the average cost of “tuition and fees” for one year at a private college was $32,405, or one year for almost $130K. How much will that figure rise by the time your child graduates high school? Prepaid tuition offers “tomorrow’s tuition at today’s prices.” Not all states offer a 529 Prepaid Tuition Plan, but it’s worth a shot to see what exists.
- Buy wine. Some wines increase drastically in value as years pass, so if you can find something valuable and keep it long enough, you could turn a good profit. Start by getting familiar with the kind of prices different vintages sell for, using a resource such as Vinfolio to see selling data from auctions and retail stores for the last eight years.
- Flip a house. The idea is simple; buy a cheap, derelict house. Fix it up. Sell it for a profit. If you’re handy with home renovation, this could be a fun and profitable investment. When you find a property that has potential, find out how much it might sell for if renovated. Then add up the cost of purchasing the property plus the cost of renovations. If the net profit seems worth the effort, go for it!
Investing in your child’s educational future is worth it. A recent study confirmed that over a lifetime, college graduates make approximately $1 million more than those who merely graduate high school.
So set your child up for success by investing for his or her future. You won’t regret it.
Have you started saving for your kid(s) college?
Born and raised in Austin, TX, Hilary Smith is a free-lance journalist whose love of gadgets, technology and business has no bounds. After becoming a parent she now enjoys writing about family and parenting related topics.
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