Jan 09, 2017 06:28 AM EST
How Parents Can Help Their College Student Graduate Debt-Free
These days, the cost of a college education is not easy. Students and their families need to sit down and talk about their plan on how to pay for higher education so that they can figure out smart ways to address this issue.
USA Today shared three tips on how parents can help their kids graduate from college debt-free. Of course, it's still on a case-to-case basis whether this can actually help students finish university without bringing any financial burden from school to work.
Take advantage of the 529 college savings plan
According to SavingforCollege.com, a 529 plan is an educational savings plan that is operated by a state or educational institution. It is intended to help families save money for future college costs.
There are two types of 529 plans: the savings plan and the prepaid plan. The former works the same as a 401K or IRA which invests contributions to mutual funds. The latter allows families to pay all or part of the costs of an in-state public college education beforehand.
Maximize federal aid eligibility
Submission of the Free Application for Federal Student Aid (FAFSA) will include a student aid report that contains your estimated family contribution (EFC). This figure will determine how much federal aid your child will be eligible for.
The publication noted that the more money is in the student's account, the less need-based aid he or she may get. Parents can maximize this by making the financial adjustments necessary during the first half of the child's junior year of high school since the FAFSA uses tax information from two years ago.
Share your knowledge
The most important thing that parents can do to help their kids graduate from college debt-free is to teach them how to be financially sound. Parents can use their allowance to teach them the things that they need to know about how to handle money.
Check out these tips on how parents can plan for their child's college education.
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