How to prepare to pay for college — from a parent and a planner
If you have a child or children in high school, then you are starting to feel the pressure of planning for college admissions. This is something my husband and I are in the midst of doing for our daughter. Believe me, the process can be daunting.
The issue that plagues many parents is cost. How do we pay for it? When children are young, I encourage parents to put money in their state’s 529 savings plan if they are considering out-of-state colleges. Our state, Maryland, offers a state tax credit, and I encourage others to explore whether their state does the same. If parents want to lock in the cost of in-state tuition, then I recommend the prepaid college option.
As financial planners, we have to assist parents with staying on top of college savings and funding at the same time we’re helping them plan for retirement. This is how I think about it.
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It is imperative that parents discuss college planning with their children when they reach high school. My husband and I have been doing so with our daughter for some time. I believe in talking with her about money and the impact of her decisions. It’s important to discuss budgeting. For example, what can your household afford? Explain to your children how much you are willing to contribute per year for their college education.
Some parents I have encountered feel obligated to fully fund their children’s college education as a family value, and therefore don’t want to talk about money with their children. However, due to competing financial family goals, there may be a need to develop parameters.
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