Most parents know that a college education is the best way for their children to learn the skills they need to have a meaningful and well-paying career. For single parents, though, saving money for your children’s college education can seem like mission impossible — especially if you’re a single mom trying to make ends meet on one income.
Even though it may seem difficult to envision being able to pay for your children’s college when you can barely make ends meet now, there are a number of things you can do to save money for your child’s education, no matter how old your children are now.
529 Plans and How They Work
If you’re wondering how to save money for your child’s education you will be glad to know that you have some great options. The foundational way to save money for college is through a 529 plan. These plans are available in 30 states, and you can even have a plan in a different state than the one where you live. You simply put after tax money into a 529 plan and when you take it out to use it on college expenses, you don’t have to pay taxes on it or on any of the money you make investing it over the years the money is in the plan.
One of the great things about 529 plans is that anyone can put money into the plan, so you can ask relatives who normally buy gifts for your child’s birthday and Christmas to consider making a contribution to the 529 plan instead of buying toys or other things that the child doesn’t really need, or to make a contribution as part of the gift. That way, even if you can’t save as much as you would like, your child’s college savings can still grow.
A variation on the 529 plan is the Coverdell ESA 529, which has much lower contribution limits but can be used to pay K-12 private school tuition as well as any college-related expenses.
You can set up an amount to be automatically deducted from each paycheck and put into the 529 or just make a payment when you want. Keep in mind that even $20 per paycheck adds up to almost $9,000 over the course of 17 years, and that doesn’t include any interest earned on investing the money.
If it seems difficult to save even $20 per paycheck, take a look at your budget to see if there are any areas you might be able to cut back in order to save a little bit more. Maybe using Netflix and an antenna instead of cable or satellite TV, buying some of your clothes secondhand instead of new, or packing sandwiches instead of hitting the drive-thru on the way to soccer practice may give you the extra money you need to save a little more each month.
Roth IRAs are another good way to save money for college. Similar to a 529 plan, money can be withdrawn for college expenses without tax penalties, but if your child would decide not to go to college, Roth IRAs can also be used for your retirement without penalty as well.
Save Money For Your Child’s Education With Reward Programs
Upromise is a reward program that offers cash back on everything you buy now, which can go toward your child’s college education costs. Users sign up for a free account and can register credit cards and some loyalty and grocery cards to earn a percentage, usually one percent, cash back on purchases.
Upromise also has a credit card that offers rewards from one to five percent cash rewards on purchases and can be used toward a 529 plan. There are also other credit cards that offer rewards for education purposes. By putting regular expenses (groceries, clothing, gifts, and some bills) on credit cards that offer rewards and then paying them back right away, it is possible to save thousands of dollars over your child’s young life that can be used toward college expenses.
A New App That Gives Scholarships
RaiseMe is a new app that awards micro scholarships to high school students for things like taking certain classes, participating in extracurriculars, and reaching certain goals like a particular GPA. Some students have earned enough money to pay for their entire college education through RaiseMe. Getting your children signed up with RaiseMe when they begin 9th grade can not only save you thousands of dollars, but can motivate your children to be active in high school and do well so they can go on to college.
High School Dual Enrollment and Advanced Placement Exams
Many high schools now offer dual enrollment for upperclassmen so that they can take college courses while still in high school and earn college credit. In addition, all Advanced Placement courses offer an exam once a year which gives students college credit if they pass with a certain score. In some cases it is possible to earn enough credits to skip a semester or a whole year of college, saving tuition, as well as room and board costs that would otherwise have been incurred.
Using Your Low Income to Your Advantage
While the average college tuition combined with room and board can be upwards of $20,000 a year (and private colleges even more), low-income students typically qualify for more financial aid. A good financial aid package can significantly lower the costs of college for students and make college more affordable and easier to save money for.
The FAFSA form needs to be filled out every year your child is in college, with the first one being filled out during the senior year of high school, in order to get financial aid like federal and state grants, student loans and work study programs. If you have trouble figuring out how to complete the forms, most high schools have help sessions that parents and students can attend to get professional help in the process successfully.
Speaking of work, there is nothing wrong with asking your child to get a job when they reach the right age and to save some of their money toward college, as well as continue to work part-time while they are in school. Sitting down with your child ahead of time to talk about how much money is available to them for college will help to set ground rules about your expectations for their contributions to their college education.
Even for single parents, college education for your children can become a reality if you plan ahead and make good use of all the resources available to you.