College funding is a topic we get asked about a lot for two reasons: the importance of the decision and the magnitude of it, or the money involved.
You, as a parent, should think through the values you want to pass down to your kids. Do you want them to focus on school and their grades? Or do you want them to have some skin in the game and be working during school or getting loans? If they’re involved maybe they will understand the value of their education. The values you want to pass on and your ability to help pay will help determine how much you actually help fund.
Let’s consider the cost of college. There are two components: you and your child. How do you help contribute as a parent?
- Cash flow: Maybe you’re planning to fit the cost of college into your budget or work extra or overtime to have the funds necessary.
- Savings: Maybe since your child was born you’ve been saving each year to have enough saved.
- Investments: There are different types of accounts and investments to help as you’re saving money.
How will your student help contribute to their education?
- Earn money before college or during college: There are a variety of ways they can work such as babysit, caddy, mow lawns, be employed in a job of the field they’re studying.
- Gifts: using birthday or Christmas gifts to put toward their education costs
- Scholarships: whether these are education or athletic.
- Loans: Will they apply for loans and help pay that off to pay their way through school?
As you can see there are many different ways to fund college. It will depend on whether you will attend an in-state or out-of-state school or public vs. private. Will it be two or four years of school
Then you as a parent can help decide how to fund that.
- Maybe you’ll decide to fund a certain dollar amount.
- Or you’ll pay a percentage of the total cost.
- Possibly you’ll pay the first four years and after that your child has to pay for the rest.
This is a big decision. There’s a lot to consider. Hopefully this has sparked some ideas and given you some things to consider. If you have questions about college funding please reach out to us we would love to discuss it with you.
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We are financial advisors in Deer Park and Barrington, IL. A team with a passion for helping others design a path to financial success — whatever success means for you. Each of our unique insights fit together to create broad expertise, complete roadmaps, and creative solutions. We have seen the power of having a financial plan, and adjusting that plan to life. The result? Freedom from worrying about the future so you can enjoy today.