Empowering Your Child’s Dreams - Investing in Your Child’s Tomorrow
Did you know that the average total cost for a year of college at a four-year school is $36,436. That's roughly $146,000 over four years[1]. Similarly, the average trade school education costs about $33,000[2]. Average student loan debt ranged from $18,344 in Utah up to $39,928 in New Hampshire for the graduating class of 2020, according to the latest data from The Institute for College Access and Success[3].
Whether you’re a parent, grandparent, or a college student thinking ahead, planning for future education is a wise and thoughtful decision. So if you are like me, stressing about increasing education costs, stay with me to read about a few ideas that might help you put together a ‘game plan’.
Here are some strategies that can help:
1. Education Savings Accounts (ESAs): ESAs are tax-advantaged savings accounts specifically designed for education expenses. You might want to consider a 529 plan or a Coverdell ESA. The earlier you start saving, the more time your money has to grow.
2. Scholarships and Grants: These are forms of financial aid that don’t need to be repaid. Encourage your child to apply for scholarships and grants relevant to their field of study.
3. Work-Study Programs: These programs allow students to work part-time while studying. It’s a great way to earn money for education and gain work experience.
4. Invest in Skills and Hobbies: Encourage your child to develop skills and hobbies outside of school. These can lead to scholarships, enrich their college applications, or even turn into a career.
Recently, I was looking for some ways to help my daughter with education expenses in the future. I would love for her to receive the best education possible and be successful in whatever her heart desires. I came across the Oregon College Savings Plan (OCSP) and I would like to share what I learned. You might want to do your research since there are so many different plans and options out there.
First of all, start saving money every month. I can set up automatic contributions, set it, and forget it! Wondering what to do with an extra few dollars from your last bottle drop? With OCSP you can connect your accounts to maximize savings. Because of compound interest, the money can grow even with the minimum contribution. The qualified expenses mean that my daughter doesn’t have to use the funds only for college. She can choose a trade school, or become a pilot. Buying books, materials, supplies for school, or equipment like a laptop or software counts as well. You might want to ask, what if my daughter doesn’t use all the money that we save for her, or she decides not to use it at all? It is not a big deal. There are some great options here! We can change the beneficiary or even roll over the money into her Roth IRA[4]. There is also a tax advantage that comes with the OCSP. It varies in different states and plans but anyone who contributes to an OCSP account can earn an income tax credit worth $180 for single filers or $360 for joint filers[5].
In the end, we need to remember that providing your child with love, support, and guidance is the best investment in their future. While financial planning is important, developing a lifelong passion for learning will reap rewards beyond monetary value. Make sure you teach your kids from the beginning the value of money, investing, saving, and sharing.
