Tips on Paying for College
The downturn in the economy has caused worry for many parents on how they will fund their children’s college education. We asked The Buckhead Community Bank’s chief financial officer, Dawn Kinard, for practical ideas on how parents and students can save money to finance their future.
What are some things to look for when scoping out scholarships?
In Georgia we are lucky to have the HOPE scholarship. If your child graduated from high school with a “B” average or has earned at least a 3.0 grade point average at the college level, he or she is eligible. If not, there are other scholarships available like the Pell Grants and merit-based scholarships. Be sure to contact the college and ask what programs it has to offer. Some colleges are offering reduced tuition for the unemployed but are not openly advertising these programs.
Are there any tax-free savings plans?
Yes. A smart way to save for higher education is with a 529 Savings Plan. 529 Plans are state-sponsored, tax-deferred savings plans dedicated to higher education expenses. Some enable you to cover just the cost of tuition and fees, while others include room, board and books. Anyone can contribute to a 529 Plan without any income limitations, including grandparents, other relatives, friends of the family, and even a boss. 529 Plans are more popular than Education Savings Accounts (ESA), but an ESA may be a better fit for some people. Although an ESA has some contribution limitations, it can also be used for private school primary education. Research the two options and pick the one that is best for you.
Is it too soon for my child to have a credit card?
If you feel your child can handle the responsibility of the credit card, I recommend co-signing. This way, you can control the account. You can receive the statements so you have first-hand knowledge of how your child is using the card. Also, you can control the limit on the card. I recommend $200 to $500 initially. They can’t get in trouble with such a low limit, but it will allow them the chance to dip their toes into the adult world of credit.
How can I encourage my child to contribute?
The current economic environment certainly supports working while attending school. Even part-time work at minimum wage may provide them with the pocket cash they need day-to-day so parents can focus on tuition and books. Studies have actually shown that students who work are better academic performers.
Any banking advice?
Look for free online banking service and free-anywhere ATM use. College kids can rack up ATMs fees in a hurry. Focus on the importance of saving — it is a hard discipline but an important one.