Students Get involved. Learn the specifics about different types of financial aid. Talk with your guidance counselor and go online to research information at www.collegeanswer.com and the U.S. Department of Education's free financial aid resource for students: Student Aid on the Web.
Start saving. If you have a job, put your earnings into a college fund. If you don't have a job, save money from any gifts or allowances. Talk to your parents about putting this money into an interest-bearing account that you'll only access for college costs.
Parents Start a college fund. If you haven't already, open an account in which you'll save for college expenses and put away a certain amount each week or month. Consult a financial adviser about investing in stocks, mutual funds, or a Coverdell Education Savings Account (ESA), which is specifically for college savings and may give you a bigger return on your investment than a regular savings account. Refer to financial magazines for the toll-free numbers or websites of mutual fund companies.
Consider a 529 plan. All states created college savings programs that make saving for higher education easier. Qualified state tuition plans—529 plans—have federal tax exemption status. Some states may offer additional tax benefits, such as allowing contributions to a 529 account regardless of the student's age or grade level. Visit www.collegesavings.org for more information.
Join Upromise. It's free and you can earn rewards in a a college savings account for eligible, everyday purchases at over 40,000 participating retail stores and services. For more information, go to www.upromise.com.
Review employment benefits. Talk with your employer about taking advantage of their 401(k) savings plan, scholarships, or low-interest loan programs for children of employees. Fortunately, accumulated funds in 401(k) plans are not counted in determining how much your family is expected to contribute toward college costs. You can also make early withdrawals from your traditional or Roth IRA for your child's higher education expenses and not have to pay the penalty associated with other early withdrawals.
Learn about tax benefits. Several education-related tax benefits are available for families under the Taxpayer Relief Act of 1997. For more information on the Hope and Lifetime Learning credits for tuition and expenses, contact the IRS at 800-829-3676 or visit www.irs.gov for a copy of IRS Publication 970, "Tax Benefits for Education." You may also visit the Nellie Mae's Your financial success/money management section for an overview of tax considerations.
It's important to communicate about financial expectations when it comes to paying for higher education. Often, despite the most conscientious planning, savings and investment account balances simply won't cover a student's cost of attendance. Student loans from Nellie Mae are affordable ways for students and families to cover tuition.