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Seven Clever Ways to Pay for Your Kids’ College

Written by Ed Avis - 5 Comments

Seven Clever Ways to Pay for Your Kids' College

If you have little kids, you probably see college expenses as some distant cloud hardly deserving attention. But as your kids age, that cloud gets closer, darker, and larger, until suddenly you realize it’s a raging storm that threatens to wreck your personal finances. The sooner you start dealing with the likelihood of that storm, the better your finances will weather it.

Here are seven clever ways to get ahead of the college finance situation.

  1. Have your kid apply for the small scholarships. When you’re facing a college bill in the tens of thousands, applying for the $250 Lions Club scholarship might seem like a waste of time. It’s not, and here’s why… First, obviously, it is some money. A few of those little scholarships can add up to serious money. Second, college financial aid officers like it when a student brings third-party money to the pot, and may sweeten the package in order to attract that student. For example, if two students with similar qualifications and financial needs apply, but one brings along a few small scholarships, the financial aid office may offer a more lucrative overall package to the student with the scholarships. Ironic? Yes, but it makes sense.
  2. Put your kid to work looking for those scholarships. Tell your daughter to spend one hour per week during her junior year in high school seeking and applying for scholarships. Have her look for scholarships related to her ethnicity, your line of work, your geography, her interests, clubs, hobbies, etc. There are thousands of scholarships available in countless niches. If your child scores one decent scholarship, her effort could be worth way more than a summer’s worth of flipping burgers.
  3. Have your kid take a few Advanced Placement (AP) courses. Yes, these courses are hard, and not every kid can hack it. But having taken a few AP courses looks good on a college application (which can increase the financial aid package in itself), and most colleges provide bona fide college credit for successful AP tests. That can mean serious savings down the road. The catch is that colleges differ as to what scores on the AP test they accept; if a student gets a 5 on an AP test, he’ll get credit at just about any college, but if he gets a 3, many colleges will not give credit. The subject plays a role, too — a 3 in chemistry is more likely to be accepted than a 3 in history.
  4. Look for more money the second year. Once your son is accepted and working his way through freshman year, start looking for more money for his sophomore year. Students drop out during their freshman year in large numbers, so it stands to reason that many previously claimed scholarships become suddenly unclaimed. Your son should visit the school’s financial aid office and ask for options about increasing his package.
  5. Consider junior college classes, even in high school. There’s no question that junior colleges and community colleges cost less than four-year colleges, but many students want to get away from home and start a four-year college as soon as possible. That doesn’t mean they can’t take advantage of junior colleges. If they take one or two core classes each summer or in the evening during their senior year of high school, they will probably not have to take the same classes at their four-year school. Just make sure the credits all transfer.
  6. Start saving early. Okay, this is obvious, but many parents assume that their incomes will rise proportionately with childcare and education costs… And many of them realize how wrong they were when the first giant tuition bill arrives. Find a good college savings account and start dumping money into it the day the baby is born. You’ll need it!
  7. Finally, choose your college wisely. This is another obvious one, but you may not know the deal. Some state schools actively seek out-of-state students and give them good deals, which means forcing your kid to attend the local state college is not necessarily the most financially prudent move. And private colleges, many of which have giant tuitions, often give away more financial aid than state schools. And they don’t care what state you live in, so the in-state issue is moot. If your kid wants to go far away to school, take the time to shop around. You may be surprised to find that you don’t have to pay any more than if Johnny stayed close to home.

What other suggestions do you have for helping pay for your kids to go to college?

Published on August 25th, 2011
Modified on September 5th, 2011 - 5 Comments
Filed under: Education

About the author: is a writer and editor in Oak Park, Illinois. He specializes in personal finance, parenting, and small business topics. He is married and has two sons.

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5 Responses to “Seven Clever Ways to Pay for Your Kids’ College”

  1. 1
    jim Says:

    I did #1 and #3 myself. I got a $1000 scholarship from a local engineering club. I took just 3 AP courses in high school and it got me credit for 3 courses in college which would be a full quarter. THat would save you about $7000 in todays costs for the school I went to. I tried #7 for sure, but the in state public school was still cheapest and actually the best school in my situation. I did get some large scholarhips thrown at me for other schools, but overall our state school was still cheapest.

  2. 2
    John Says:

    I’ve wondered about using a life insurance policy as a possible vehicle for college savings:

    Take out a Single premium whole life policy on a child at maybe 1-2 years age. The policy covers the child throughout their young life and builds cash value. The originator still has control and can withdraw from the cash value as needed to cover college expenses. When the young adult is ready, turn over control of the policy to them so they can keep it and let it continue to accrue value or cash it out, convert it, whatever they want.

    Obviously this approach is not the most efficient way to apply money to college, but you also have some life insurance coverage right up front that is not subject to health condition. If the child does not go to college, the value is still there.

  3. 3
    Tim of Angle Says:

    How about expecting them to pay for it themselves?

  4. 4
    Stacey Says:

    Don’t forget that most private colleges will match or beat their competitor’s financial aid offers. I used my “safe school” state school’s estimated aid award to get more money from the private college that I eventually attended.

    Once you’re in college, get a part-time job. (On-campus jobs are a great place to start looking.) Don’t earn too much or it can affect your grant eligibility – but earning just a few thousand dollars can make a big dent in your student loans. I paid off half of my loans by graduation and didn’t have a huge burden of debt while looking for my first job.

  5. 5
    Been there Done That Says:

    Term life insurance is useful for people with dependents who could not support themselves otherwise. Most young parents fit this description. Children don’t.

    Whole life insurance is useful for people seeking to avoid part of the estate tax. Most people don’t have that much and most kids certainly don’t.

    Most people are better off maxing out a 530, followed by 529 and an IRA if the kid has qualified income.

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