The average American mom raises 2.4 children, according to the Pew Reseach Center. And unless she has a favorite, she’ll likely strive to have each of her children attend college.
If you find yourself parenting a full household, learn how to save for college for your kids by following these five steps.
1. Start saving as soon as possible
You don’t need a fancy data point to know that the cost of college is rising, but here’s one anyway: The average price of tuition and fees for a private four-year school in 2017 was $32,410, according to the College Board. And that figure doesn’t include extras such as room and board.
To meet climbing costs, it’s wise to begin saving up as soon as possible for your kids, rather than waiting until the last minute to pay for college.
There are many ways to sock away funds for the future, such as 529 college savings plans, education savings accounts, and Roth IRAs. Make sure you evaluate all of your college-savings options before picking the best one for your family.
With 529 plans, it’s best to open an account for each of your children, as you’re not allowed to make withdrawals for someone other than the beneficiary.
If your kids are more than four years apart in age, however, you could get by with one 529. You can change the beneficiary once your oldest child has graduated.
2. Set monthly and long-term goals
Once you’ve opened your accounts, it’s time to set a goal. According to a SmartAsset study, you should stash away $632 per month if you have two kids heading to college — and hope to retire by 65.
Scour your budget to make room for monthly contributions to each child’s account. You might send a greater percentage of your contribution to your older child’s account and later make up the difference for your younger child down the road.
It’s also helpful to consult a college savings calculator. It’ll take your monthly contribution and spit out your potential savings in the years to come.
As your kids grow older, rely on specific schools’ net price calculators to figure out how much your family could expect to pay.
3. Treat each child’s savings uniquely
Focus on contribution amounts more than account balances, and treat your kids’ savings as unique but equally important goals.
For example, you might contribute equal amounts to each account but choose more aggressive investment strategies for your younger kids. After all, they have more time to ride the market’s highs and lows before reaching college age.
Older children’s savings might be better off with a conservative investing style. Typically, 529 plans come with age-based investing options that match your kid’s freshman year with the maturity date of your savings. That type of plan could make managing your savings easier.
When your oldest is approaching their late teens, re-evaluate their use for the funds. Maybe they’re planning on applying to lower-cost trade schools, for example. In cases such as this, you could transfer their unused education funds to a younger sibling who’s intent on attending a more expensive four-year school.
4. Ask for help with contributions
Saving up for one child’s college costs can be a burden. When you add a second, third, or fourth child to the mix, the task becomes progressively harder to accomplish.
If you’ve figured out a monthly contribution amount within your budget but don’t see a clear path to your long-term savings goal, consider other ways to grow the funds.
One popular strategy is to ask family members and friends for 529 plan donations on birthdays. You might ask your kids’ grandparents to contribute more often if they’re financially able.
Year-end tax refunds, employer bonuses, and other windfalls could also be contributed to meet your long-term goals.
5. Apply for financial aid to fill in the gaps
As each child approaches their final year of high school, ensure your family completes the Free Application for Federal Student Aid (FAFSA). It opens the door to grants, scholarships, and federal student loans.
All of your savings to this point will be captured by the FAFSA and will affect your Expected Family Contribution (EFC) — the amount of money you’ll pay for college out of pocket.
Thankfully, the FAFSA will give you a break for having a larger family and for having multiple kids in college.
In fact, your dollar-figure EFC is divided by the number of kids in your household. With two daughters less than four years apart, for example, an $18,000 EFC would be split into $9,000 for each child while they’re in school.
The CSS Profile, used primarily by private colleges, may be less accommodating. According to Goal Investor, you could be responsible for about 60% of your EFC for each child attending college at the same time.
As you’re completing the FAFSA, encourage your kids to apply for scholarships. They can help you ease the burden of education costs.
The more money you can save, the less time you’ll have to spend researching federal and private student loan options for your future college students.
Need a student loan?Here are our top student loan lenders of 2019!
|1 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
2 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Information advertised valid as of 2/1/2019. Variable interest rates may increase after consummation.
3 Important Disclosures for Discover.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2019 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
6 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
7 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
8 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|4.23% – 13.23%1||Undergraduate and Graduate|
|4.20% – 11.44%2||Undergraduate, Graduate, and Parents|
|4.84% – 13.49%3||Undergraduate and Graduate|
|4.50% – 10.11%*,4||Undergraduate and Graduate|
|4.25% – 13.25%5||Undergraduate and Graduate|
|5.85% – 6.99%6||Undergraduate and Graduate|
|3.95% – 9.81%7||Undergraduate, Graduate, and Parents|
|4.45% – 12.42%8||Undergraduate, Graduate, and Parents|