For many parents, thinking about starting a college fund when a child is still quite young gets lost in the shuffle of changing diapers and selecting a preschool. The best way to help ensure that you will have enough money to send your child to college is by starting to save early, according to CNN Money. Financial website Smart Money figures that if you save $100 a month for 18 years with an 8 percent compound annual return, you should be able to accumulate a $48,000 nest egg. It won't cover all the costs for a four-year university, but it is a good start.
According to Smart Money, asking your kids to help pay for their own education is a good way of reducing your financial burden. Getting a part-time job will help teach your child responsibility with money and will also help make her more invested in her education. Many kids can find jobs in the food service industry, while others might try their luck at a supermarket or clothing store. Working for minimum wage for 20 hours a week over a 12-week summer break, a student can earn nearly $1,800 toward college.
Many middle-class families believe that they make too much money to get federal and state loans or grants to help pay for college. However, Smart Money says that some parents might be surprised as to what grants and loans they do qualify for, regardless of income. Whether you are struggling financially or are doing OK, fill out the Free Application for Federal Student Aid. That will make your child eligible for a Federal Stafford Loan, a subsidized loan with a lower rate than a private loan. You can also apply for federal grants such as the Pell Grant, which offers up to $5,550 a year, depending on your financial need and other factors.
One option that Good Housekeeping highly recommends is to send your child to a community college for two years first. By letting your child live at home for two years while he earns his associate degree, you can save tens of thousands of dollars. Even with recent tuition increases, the national average for one year's tuition at community colleges is $2,721, according to the College Affordability and Transparency Center. In the same study, tuition and room and board at private four-year universities had an average cost of $22,387 per year.
By excelling in community college, your student can access grant and scholarship opportunities he might not have otherwise been eligible for. Attending community college also provides an opportunity for your student to decide on a major, which might influence what four-year university he chooses to attend.
Private schools often cost many thousands of dollars more per year than public schools, so it is important for the budgeting process to decide where you see your child attending. If you have saved $40,000, that might only pay for a year at a top private school. However, that same $40,000 could more than cover the total cost of attending two years at a community college and then attending two years at a public university. U.S. Department of Education data show that the average net cost of a four-year public university per year is $10,471. If you spent $12,000 a year for a public university and an additional $6,000 over two years at a community college, the total amount spent would be just $30,000.