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Are you running out of time?
If your child is older than elementary-school age and you haven't started saving yet, you still have options. (See "Cram for college costs in 5 years or less.")- Assume you'll get financial aid -- just not enough. If you're counting on a lot of aid, you will be unpleasantly surprised to learn how much colleges expect you to contribute. On the plus side, the recession has led to an increase in Pell Grant money.
- Start saving now. Even if your savings reduce your aid package, any money you put aside will help reduce the amount of debt later.
A little extra couldn't hurt
Depending on your child's age, look for ways to add to your college fund. Try these ideas:- If your baby is on the way, have a "send my baby to college" shower. Set up a college fund and let guests know how to make deposits.
- If you have an infant or toddler, be as aggressive in your investments as your comfort level allows.
- For an elementary-age child, set up a savings account together so he or she can be invested and involved in college plans.
- If your student is starting high school, move your college fund to safer, less-volatile investments.
- No matter how old your child is, consider participating in credit card rebate and loyalty programs, such as Upromise or BabyMint. Similar to airline frequent-flier programs, these provide rebates or credits to a 529 account in exchange for shopping at particular retailers or purchasing certain products.
- When college bills are looming, look for ways to cut costs. (See "Your 5-minute guide to college costs.")
Video on MSN Money
College financing 101Money Talks reporter Stacy Johnson gives a lesson on creative ways to save 20% or more on college costs.
You're on your way
Once you select a method of saving and set it up with the appropriate investment professional, nurture your investments -- both the funds and the kids.- Be enthusiastic about your child's early schoolwork. Kids who love to learn early on grow up to be good students -- and therefore can get scholarships not otherwise available.
- Set small financial goals just as you would any other long-term investment.
- Use automatic withdrawals so your determination to save doesn't waver when you write the monthly check.
- Increase the amount you save each year to keep up with tuition inflation.
And remember . . .
Some final thoughts:- Don't fund your child's college at the expense of your own retirement. Your child will have more sources of money for college than you will have for your golden years. (See "6 reasons not to save for kids' college.")
- You don't have to save the entire cost of four years of college. Grants and loans can bridge the gap between your savings and tuition bills. (See "College students get a break on costs," as well as the Scholarship Search Web site, "The insider's guide to student loans" and "The insider's guide to scholarships.")
- Be flexible. Programs and investments continue to evolve. Tax laws and your own circumstances will change. Review your financial situation periodically and make appropriate adjustments.
If you've got a hint we haven't included or find a factual error, let us know by sending an e-mail to Five.minute@hotmail.com.
Updated May 20, 2009
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