When it comes to saving money for a college education, too soon is not soon enough. Parents who start saving for college early, even as early as when the child is born, will likely benefit the most in the long term. Many parents will take for granted that since college is a long way off for their babes, they are making the mistake of not using time to their advantages.
There are also other common untruths that keep parents from saving for college as early as possible. Here are a few mistakes you need to avoid making when saving for your children’s college funds:
Easier to Pay With Loans
The reality is that student loans will only pay for so much through the four or more years of education. Many of the federal assistance students are eligible to receive will only cover so much of the costs a 4 year institution will charge. Additionally, the total cost of college, including board and supplies will be much higher in years to come. For families whose income is more than average, financial aid may not be easy to come by either. If your income by the time your children are ready for college is even higher, which is likely, than it is now, your chances to receive enough financial aid later will be diminished. Proper financial planning should involve paying for college without additional aid.
Putting Too Much Stock in Scholarships
Many parents will be expecting big money from private scholarships but in reality only areound 7% of students will receive one or more private scholarships. The average amount of such a scholarship is around $2,000. Once a student receives a scholarship, it is likely that any federal aid received will be reduced. The actual chances of receiving a private scholarship are 1 in 15 so parents and students alike need to maintain realistic expectations about scholarship paying for college.
Saving and planning for college is the only way to be fully prepared for when the time comes to further education. By saving now, you will have less of a need to borrow money and therefore, reduce the amount of long term debt you subject yourself and your children to down the road. Repaying student loans can really drain future finances and can make starting a new life and career for your child all the more difficult.