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Saving for College
How to Budget for Post-Secondary Education
by Chris Parry (Write for us!)
(Click on the links within the article to get definition of that word)
If you have a son or daughter who is reaching that age when they start formulating a desire to go off
to university, you have probably already felt your mind jump ahead to the awful practicalities of just
how you are going to afford to send them there
in this day and age. Figuring out how to send a kid
(let alone two or three kids) off to college or university is somewhat of a modern day horror story - a cautionary
fable today's baby-boomers will tell their grandchildren to do whatever is necessary to avoid having them suffer
through similar experiences
Contacting a financial advisor may be a good first step in understanding just how you should go about putting
away money for your son or daughter's college education. A good financialadvisor will look at your portfolio
and recommend changes and investments that can be made in order to maximize the potential of the marketplace
and ever-changing economy. He can tell you whether or not you should take some of the money you are putting
into your IRA or some other savings account, and place it in a mutual fund that will ensure faster growth so
that by the time you actually come around to having to foot the bill for college, the burden will be lighter. Also,
he may recommend the possibility that, if you are in dire financial need, your child should
apply for a student loan.
If you do apply for a student loan, as a parent, the payments on it will begin right away, but you are allowed
a much higher limit to the amount you can borrow than if your son or daughter applied for the loan by themselves. At
least, this is the case with federalloans. If you get a private student loan, most often you will be able to
get a much bigger loan, and the payments on it will not have to be made until after graduation, but the interest
will tend to accrue right away. What this means is that you will have to decide whether or not you will be able
to pay off a student loan in one big payment (as opposed to making regular smaller payment), or whether the best
solution is for your child to save up independently in order to pay it off upon graduation. A good financial advisor
will be able to gauge what the best plan is for you in your currentfinancial position, and he will also be able
to forecastfluctuations in the economy so that you can make investments that will pay off in the short to medium term.
After all, when
you are saving for your son or daughter's college education it is not the same as saving
for your retirement. You have to invest in somewhat riskier ventures in order to make sure that you
generate enough of a profit to reach your goals in a relatively short period of time. The expertise of a
financial advisor can be of great help to you and your family, so that you can go on about your life without
writing that cautionary tale in your mind for future generations.
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