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September 12, 2010

When the college bill is due

If Junior is in kindergarten now, college may seem far away. You are more concerned with Dick and Jane books than the cost of college. If Junior is graduating high school, then you are already in a state of shock over the cost of college.

Somewhere between kindergarten and high school graduation, you need to consider how you are going to pay for your children's college.

A college fund is not loose change. If your child were enrolling in a four-year program this fall (and finished in four years) at a private college, the total cost of tuition and fees would be $121,800. A public college will cost you $32,600. Are you planning for private or public colleges? The historical rate of increase in tuition and fees is 6 percent. So, it isn't getting any cheaper.

What are parents to do? First, parents, grandparents or others can open a 529 plan to start saving for a child's college. A 529 in Louisiana allows contributions up to $2,400 for a single parent and $4,800 for a couple not to be taxed at the state level and withdrawals made for approved education expenses to be made tax-free. More information about the 529 plans in Louisiana is available at: .

Second, investigate and apply for scholarships and grants — a great way to offset the cost of college because this money doesn't have to be paid back. Students with the help of their parents should fill out a FAFSA, or Free Application for Federal Student Aid. More information about FAFSA is available at as well as from the college you are interested in attending.

Depending on your income, your college-bound child may qualify for federal grants or federal work-study. Additionally, you need to investigate scholarships that may be offered in their specific area of study or through the university's foundation. Also, many businesses, social organizations, churches and other places you may be associated with personally have scholarship programs for which you should apply.

Third, many college students work jobs to help earn money to pay their college bills. Working while you are in college can help improve management skills and provide much needed work experience.

Fourth, consider student loans. With student loans you need to be careful; student loans have to be paid back. As a student it is easy to view it as "free money," but six months after you graduate, you must begin paying it back. It is easy to incur student loans during a four-year program that translate into a monthly payment the size o a car payment. No matter how much you think you'll make when you graduate, you'll soon be shocked on how far that money doesn't go.

Fifth, explain to your child that they need to live simply while they are in school. College students need to understand the worth of a dollar and the concept of a hard day's work. Expect your college-age student to help keep costs down by making wise decisions regarding money and their time. In this age of iPhones, netbooks, designer purses, customized vehicles and restaurant eating, oftentimes most of the expenses incurred by college students have little to do with tuition and fees from the college.

To teach kids to live within their means and to save for the future is perhaps the greatest gift a parent can give them. However, it is a tough lesson for parents to learn themselves much less to pass to the next generation. It definitely isn't the fun, glamour and life extravagancies that we see on TV or in the movies. Living simply and within your means is the surest way to make it through the good times and the bad times — including sending your baby to college.

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