Avoid These Myths About Saving for College

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Do you understand the true cost of college?

Have you planned for it? Do you know how the puzzle pieces fit together for the benefit of your family?

According to a 2017 Sallie Mae survey, 86% of families expect their children to attend college. Yet, only 39% have any type of plan at all to pay for it.

Parents who don’t save tend to end up amassing quite a bit of student debt, whether through PLUS loans or other private loans as co-signers.

Last minute financial planning – you know, waiting until junior or senior years in high school – adds an incredible amount of stress to an already stressful period.

Taking action, saving money in any amount at all, offers some peace of mind and reduces stress levels.

Here are a few thought processes you probably should avoid…

We’ve got plenty of time to save.

Maybe. Time flies. But, starting early, even in small amounts, adds up. If you don’t do anything, where will you find the money when you need it?

I don’t understand investing.

That’s fine. Investing and saving are two distinctly different animals. When you invest (e.g., 401k plans, 529 plans), you place your money at risk.

There are no guarantees your investment will grow. In fact, there are no guarantees you’ll end up with the amount that you have invested. You could lose some or all of it.

When you save, you are assured your money and any earnings thereon is safe and can’t be lost.

My children will receive financial aid if I don’t save.

Maybe. The FAFSA considers income much more heavily than savings, allocating at least 22% toward the cost-of-attendance.

Further, parent savings are assesses at a much lower rate

What you may not understand is that student loans are considered financial aid. And, your children may not qualify for any aid other than student loans.

That’s why saving for the cost-of-attendance is vitally important.

I don’t make enough money to save anything for my children’s education.

While that may be true, how do you know?

Are you spending more than you need to in any area of your life?

Are you being efficient with the money you do bring home? Is there anything you can do to change your spending habits?

There’s no way to offset future college costs.

While the expected cost-of-attendance may feel overwhelming, even paralyzing, not saving anything won’t help at all.

Ultimately, you may be writing checks when the time comes to cover the cost. Will the checks be huge? Or, might they be smaller?

Find out some of the best places to SAVE your money. Contact our Professional College Planners to schedule your family’s first meeting of its college planning campaign!

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