College Savings Mistakes
With a new school year underway, many parents of youngsters are looking ahead to the future — to a year when autumn will bring the start of college. And to the concerns about paying for an advanced education once their kids complete high school.
To ensure you can help your child as much as possible when it comes to college funding, do your best to avoid these common pitfalls that can cost you money in the long run.
1) Letting time pass by
Time flies, and kids grow quickly. But if you start saving small amounts early — when your child is born or turns pre-school age — you’ll enjoy the benefits of compounding interest. And your child will have more funding available.
So whether you can afford $10 a month or $100 a month, start as soon as you can.
2) Choosing the wrong type of investment account
Investments vary from low-risk/low-return to high-risk/high-return, and everything in between. And some have greater tax implications, or can even negatively affect financial aid opportunities.
The key is choosing a savings approach that corresponds to the length of time you have to save — and doing all you can to preserve the savings you accumulate over time.
A Horizon Bank Advisor can help explain the variety of college savings options available to you, and help you determine which approach may be best for your needs.
3) Not pursuing an appeal
If your college-age child receives less financial aid from his or her favorite university, you can pursue an appeals process to request that the school match the amount offered elsewhere. Appeals can also be made if you’ve had a sudden change in income, or other life event that affects your ability to assist your student.
Check with the college to learn about this process, and read up on how to write a good appeal letter.
4) Putting yourself last
Remember that colleges have plans in place to offer loans and other financial aid packages. No one expects you to cover all of your kids’ college costs. So don’t neglect saving for your own retirement in an effort to save more for education. And don’t ever borrow against your retirement accounts in order to pay for school.
Getting Sensible Advice
Whatever your child’s age, it’s never too early or too late to start saving something toward his or her education. And Horizon Bank’s financial experts are happy to help you with clear insights and Sensible Advice. To learn more about how to get started, stop by your local Horizon Bank branch, or contact us today!