Exploring saving and scholarship options.
Whether it’s years away or just around the corner, college is an expense most families worry about. No matter what the circumstance, there are several ways to help fund your child’s higher education when the time comes.
For Northeast Ohio residents, the Ohio Tuition Trust Authority is a way to save money for your kids by offering a variety of savings plans that provide tax advantages.
The College Advantage 529 Savings Plan consists of two plans: the direct plan and the advisor plan.
Paul Paeglis, executive director of the Ohio Tuition Trust Authority says “The direct plan is one where the consumer directly invests in the plan with us and not through a financial advisor. Our direct plan has 23 different investment options, which include several tax benefits.
“The advisor plan is very similar in structure, it has 21 investment options available, but the difference is that is administered by Black Rock for us and it is sold through financial advisors.”
The 529 Savings Plan is unique with tax benefits from the state of Ohio. Paeglis says, “It’s an upfront tax benefit from the state of Ohio of up to $2,000 off of your taxable income to the state or each beneficiary whose account you would contribute to. And then you get long-term, tax-free growth of those dollars free from not only state taxes, but from federal taxes as well. That’s a powerful tax benefit to not have the growth taxed as you earn it, as it would in a mutual fund or bank account.”
Starting Early
While it may seem far away for an infant, it’s never too early for a family to start saving money for a college fund. Patty Saddle from The College Planning Center.
“[Parents should save] as early as possible — even once you bring your child home,” says Saddle. “Saying that is not as easy as doing it in this economy, but the sooner parents can start saving, even if it’s $25 a month, the better.”
Darren Rose from The Daily Scholarship, a local organization that helps get local businesses to provide scholarships for the community. agrees, and advises to start saving on “day one.”
“As soon as the kid is born,” he says. “We see families unprepared so it is always better to start early.”
While college tuition amounts are ever-changing and fluctuating within this economy, it’s always a good idea to put away a reasonable amount. If that means $20 or $200 a month, every bit helps.
“The reality is that every dollar you save toward that goal will be that much less that you then have to find a way to pay for out of current income or out of student loans in the future.” Paeglis says, “It’s pretty rare for someone to regret saving too much for college — that doesn’t happen very often.”
Scholarship Sources
If your child is already well into his or her high school years and time is short to save, scholarship opportunities may be the way to go.
There are thousands of scholarship funds and programs, so be sure to research ones that are unique to the college or university your child might be attending, as well as federal and state scholarships or those from private donors.
“Try everything and be diligent,” says Rose.
Saddle also advises a few ways for students to get ahead with scholarship opportunities.
“The absolute best way for students to receive merit aid/scholarships is to work at achieving a high GPA and test scores on their ACT or SAT.” she says. “When a student applies to a college where they are above the average student who attends that college (top 25 percent), the student will usually be able to receive scholarships from that college or university.”
Saddle recommends first looking at the college your student plans or would like to attend and check its website information under financial aid and scholarships.
“Then check with the high school guidance counselor to see what scholarships are offered, along with if any are available in their community. Last place are the national scholarships, because there is a large amount of competition, therefore, making these types of scholarships more difficult to receive.”
Students can also contribute to their college fund by holding a part-time job or completing tasks around the neighborhood like babysitting, lawn mowing or other household work.
No matter what the circumstance, the best way to save for your child’s education is simply to start. Each contribution will make a difference that puts a college opportunity on the map.
