Five tips to plan ahead for college

A college education will certainly be worth it – but the student loan debt may not be worth the burden. Here are five things to consider now if you’re thinking about college for a young child.

1. It pays to save in the right place. A 529 college saving plan lets the money grow tax-free for college, and if it is titled in the name of the parent or a dependent child, the asset has minimal impact on financial aid. Chose a plan based on low costs and past performance, not necessarily your own state’s plan. Don’t save in custodial accounts, which weigh heavily against you in financial aid formulas.

2. Be wary of state prepaid college tuition plans. Consider your state’s financial condition. In most states, these accounts are not a general obligation of the state. And although the state could offer vouchers to attend an in-state school, it may no longer be the educational opportunity you want for your child.

3. Start talking about college with your child in the high school years. Make sure he or she understands family finances and limitations, as well as the contributions the student must make. Discuss the possibility of living at home for a year or two and attending a community college before transferring to a university, which may save a lot of money.

4. Don’t count on scholarships. It’s great if your student is an athlete or an exceptional scholar. But most scholarships and grants (free money) cover only a small part of college expenses. Start researching scholarships early at www.Scholarships.com.

5. Stress the role of an education in creating financial security. Too many kids go off to college looking for four years of fun. College is for expanding the mind - and for organizing knowledge to leverage success in the future.

The earlier you start stressing the importance of college, and the costs, the more realistic your family choices will become - and the more seriously your child will treat this opportunity. That’s the Savage Truth!