INDIANAPOLIS — It’s never too early for parents (and children) to start thinking about how they’ll afford college. Andy Mattingly, CEO of FORUM Credit Union joined Ryan to give some advice.
What should parents of pre-high school kids have on their radar for post-high school education?
Start by focusing on a few important considerations. How much do you want to pay for any post-high school education expenses that can include technical training, trade schools and college. From there start calculating how much money you will need to save and how you will begin to save that money. Also determine the best place to build this fund especially if there is any question about the path your children will be taking. Flexibility in your savings option is very critical to avoid paying penalties later and also in maximizing your contributions.
How do most people pay for post-high school education or training expenses for their kids?
Surprisingly most people use a combination of methods to pay for post-high expenses. This includes using funds from a 529 savings plan, scholarships, student or parent education loans, other loans, other savings options, student work and even from monthly income if there are monthly payment plans. The most important point is that most people use a variety of methods to help their children either attend a trade school or college and it can change even while the child is in school or from child to child. One of the most important early moves to make is to help your child become stronger academically because merit-based scholarships can become an important source of funding a stretch college choice.
Why would parents want to consider using a 529 plan for post-high school expenses?
One of the primary reasons is that earnings in these accounts grow tax-free and for some states contributions can lead to a state tax deduction. They are very easy to open and maintain and you as the parent remain in control of the funds, not the beneficiary. Withdrawals are tax free as long as they are used for qualified expenses from eligible college and vocational schools, generally, those that are eligible for federal financial aid programs. Indiana’s College Choice Savings plan is one of many 529 plans that are particularly a very smart choice due to its flexibility.
What advice would you give parents to financially navigate education for their kids?
It all starts with adjusting your budget to have the funds to start saving for post-high school education without derailing your vocational freedom savings efforts. Another important move is to start building your child’s academic skill set because merit-based scholarships can be very helpful to offset expenses. Talk to your kids early on in high school to help set realistic expectations for their post-high school education. Whether it is keeping their college choices within your budget or a vocational training school that fits your available funds, it is always best if your kids really understand how much you can afford so that they can plan for our much in student loan debt they might need if they pick an expensive option. Finally, you don’t to have it all saved, just as much as you can and as your children go through post-high education you will have other sources that you can use.