How to Plan Financially for College if Your Teen is in High School

Thursday, June 3, 2021 | Melissa Brock
How to Plan Financially for College if Your Teen is in High School

Think you're totally behind in the college game? Good news: You can still save for college even if your teen will officially become part of the high school crowd in the fall. You still have time on your side!

Take a look at the following benefits for planning ahead for college and the steps you can take to plan ahead financially even if you think you're late to the game. (You're not!)

Benefits to Planning Ahead for College

Why even bother to save at this point if your child has achieved senior status this year? After all, you can still take out student loans, right?

Benefit 1: Your child will more likely attend college if you have money saved.

Your child will statistically go to college even if you've only saved a small amount of money — even if you save just $1,000!

The Center for Social Development at the George Warren Brown School of Social Work at Washington University in St. Louis proved in a study that students will more likely attend college if parents save some money for college. 

Benefit 2: You can start with a better idea of how much to save.

Think about this: You may have put yourself into an even more advantageous position compared to when your child was two years old. How? Well, when your child was two, you had no idea how much college would cost. Technology didn't even supply the comprehensive college cost calculators you can find on Google.

Benefit 3: Planning ahead helps put you in control.

When you put yourself in the driver's seat and tell your money where to go, you effectively put yourself in control of your money — not the other way around. You don't want your money to control you! Planning ahead financially allows you to better understand what comes in and what goes out and how you can use what "goes out" toward college to your advantage.

Steps to Plan Financially for College

Take the following steps to financially plan for college and put yourself in the driver's seat!

Step 1: Get an idea of the type of college your child will attend.

This can help you take a huge load off. For example, if your child has decided that he will attend a local community college, it can offer one of the cheapest college options possible. 

(In 2016-17, the average tuition and fees at public two-year colleges was $3,435, while students who lived in state paid approximately $9,410 for a public four-year college.)

Doing this can also help alleviate some stress. Sometimes you just need to know how much it costs to help you understand that you can do it! The cost might seem more doable than you think!

Furthermore, with a combination of merit-based scholarships and other aid, you might even realize that a private college could end up within the realm of possibility. (The average cost for a private, four-year institution cost $43,139 in 2017 to 2018, but that doesn't take scholarships and other awards into consideration.)

Step 2: Use each school's net price calculator.

You can find something called the net price calculator on each college or university's financial aid website. Net price calculators make it easier to enter information about yourself to find out what other students similar to your child's financial profile paid to attend the institution in the previous year, after taking grants and scholarship aid into account.

Step 3: Estimate the amount you can save per month.

Based on the results of each school's net price calculator, how much do you have to save per month? It's okay if your child doesn't know what school he or she will attend. At least you have a ballpark estimate for how much it will cost. 

Here's how this might look. 

Let's say the college estimates that your total out-of-pocket costs will amount to $25,000 for the first year, after merit-based scholarships, work-study and other factors come into the picture. 

Here's how you might want to save. Estimate how much in outside scholarships your child may get, then save $2,000 per month into an account. You would save $24,000 and account for a $1,000 earned scholarship. 

Of course, you'd need to also save for three more years of college as well, but if you save that $2,000 every month during each year of high school starting in ninth grade, you'd generally have the right amount to pay for college!

Remember that you don't have to save for the full amount of college. Your child can take out federal student loans, which offer the lowest rates on student loans on the market.

Step 4: Choose where you want to save your money. 

Where do you want to put your money? In an ETF? A 529 plan made specifically for college savings? Invest it in a mutual fund?

You may want to consider investing in a low-risk fund due to the fact that you only have a four-year turnaround (or a one-year turnaround if your child will enter senior year this fall). 

Consider the tax benefits of the method you choose. For example, earnings in a 529 plan grow federal tax-free and will not be taxed when the money is taken out to pay for college and your state might also offer tax benefits as well.

Step 5: File the FAFSA.

Everyone should file the Free Application for Federal Student Aid (FAFSA), regardless of whether you think you'll "get any money out of it." Many families don't believe they'll qualify for any state or federal aid so decline to file the FAFSA. 

This is a mistake if you want your child to qualify for federal student loans. If you believe your child will need to take out federal student loans but feel that you make too much money to qualify, you want to file the FAFSA anyway.

Step 6: Put together the puzzle.

Putting together all the pieces of the puzzle involves some critical thinking and may even involve some creativity. In other words, how much can your child contribute from his savings? How much will Grandma chip in? 

Get Ahead of College Savings

No matter what, get it into your head that you can save for college. Pick a savings goal and stick with it each month. Need to get a side hustle or make sure your child picks up extra hours at his part-time job at the grocery store to make the goal per month? 

You'll get ahead of college savings in no time.

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