Planning for your children’s future can feel daunting. Fortunately, a bit of financial foresight can help you figure out how to pay for college without breaking the bank or compromising your child’s future by taking on too much debt too soon.
How to Pay for College without Breaking the Bank
Although working with a private wealth management firm like Alpha Omega Wealth is a good way to set up a long-term personal banking strategy, setting money aside for your financial goals is one of the best ways to pay for college without loans.
Financial Preparation: Cut Education Costs by Saving Early
The options that are best for your finances and your family will vary according to your unique situation. Knowing your options will both empower you and protect your family’s fiscal future. Some of the most popular college saving plans include:
529 college savings plans
Although each state has its own rules and restrictions for these accounts, annual investment limits are generous for 529 plans, enabling your family to stock away substantial college savings. Another bonus of 529 accounts is that those accounts owned by parents are tax-free while also having a low impact on your student’s financial aid calculations.
Prepaid tuition plans
Although these plans are generally for public schools and in-state institutions, a 529 prepaid tuition plan is another tax-free savings account that allows parents and other contributors to pre-pay for tuition. (There is also a private college plan available for more than 250 private institutions.)
Individual Retirement Accounts
As long as your own retirement is on track, you may even consider utilizing traditional and Roth IRAs as a choice for college savings. Roth IRA accounts, like all retirement accounts, don’t get counted as assets on the FAFSA so the value of your Roth IRA won’t hurt your child’s financial aid eligibility.
Regardless of how you choose to start saving, avoid holding assets in your student’s name. Any asset other than 529 savings accounts are counted much higher in aid calculations than parent-owed accounts and could result in your student getting awarded less aid.
Learn How to Pay for College with a Private Wealth Manager
At Alpha Omega Wealth, we are here to empower you with the financial knowledge and tools you need to help you figure out how to pay for college without breaking the bank. Our private wealth management firm offers free consultations—get your legacy on track with us today!