It’s just about that time of the year. A time when parents say good-bye to their children and send them off to the world of college. Sending your kids to college is a proud milestone and a big part of the American dream. However, many parents make huge mistakes when trying to achieve this dream. The financial struggles that parents go through are magnified, since the average cost of sending a child through college for four years has risen year by year. Below are some of the financial pitfalls that you should avoid as a parent sending your kids off to college.
Using Loans to Pay Tuition
Many parents will consider taking loans against their assets to help their child go through college. While this is a noble goal, it is not always the smartest move for a parent. By doing this, they are sacrificing their retirement so that they can ensure that their children get a college education. These parents fail to see that the younger generation have a longer duration, as well as opportunity to pay off their debt. They also fail to consider the high interest that they will be charged. You will have to pay back this amount, even if your child does not graduate.
This is the first time your child will be fully on their own. They will have to be responsible not only for themselves, but also for their finances. Many parents fail to sit their children down and come up with a realistic plan or a guide when it comes to day-to-day finances. This way you can both come up with a spending figure that you both can live with, helping you identify how much you should borrow. Planning will help minimize the amount you borrow and the duration that you take to pay it back.
Not Taking Advantages of Scholarships
This also falls under poor planning. Many parents wait until spring of the child’s senior year to start applying for scholarships. By this time, most of deadlines of the scholarships have passed. It is never too early to start applying for scholarships. The sooner they start applying, the fewer deadlines they will miss and the higher their chances of getting a scholarship.
Those who qualify for scholarships include:
- Star athletes
- Academically gifted
- Low income families
Saving Under Your Child’s Name
Many parents think that this is the best way to tackle their savings, but that is not always the case. Accounts that are under the student’s name are usually taxed at higher rate when financial aid is being calculated. Also by saving in your child’s name, you have limited control over the money.
When it comes to saving for college, there is a great deal of planning that goes into it. To make the most of your money, it is important to hire the services of a qualified accountant to assist you. They can help you plan accordingly, so that you don’t fall into one of these college financial pitfalls. The experts at Bodine Perry are ready to help. Call (855) 851-8318 or visit www.bodineperry.com today.