Financing an Education

Education costs can far surpass that of a car or even a house. Plan ahead to find the most cost-effective ways to pay for one of life’s greatest opportunities.

Start Saving Now

Coverdell Education Savings Accounts

If you’re a parent of a young child and wise enough to be thinking ten or twenty years down the road, then kudos to you. Start saving now for your child’s education with a Coverdell Education Savings Account. A Coverdell functions like an IRA and can have significant tax-savings benefits. Plus, they can be used for a variety of pre-college education expenses.

529 Education Savings Accounts

529 Education Savings Accounts are state-sponsored programs varying in terms of tax benefits and eligibility. Many offer more aggressive growth, higher-risk investment options as well. Check out the North Carolina 529 Plans at cfnc.org. There are also a number of other states that welcome out-of-state investors into their 529 programs — just search to see which programs best suit your goals and have the best ratings.

Don’t have much time?

Start saving anyway. The more you can pay for with savings the less interest you’ll pay on what you have to borrow.

Apply for Financial Aid, Scholarships & Grants

Submit a FAFSA

Even if you don’t expect to receive needs-based financial aid, submit a Free Application for Federal Student Aid (FAFSA). The FAFSA puts you in the running to receive multiple types of financial aid including federal grants, work-study opportunities, student loans, and some state and school-based aid. Millions dollars in federal Pell Grant money are left on the table every year because eligible students don’t submit a FAFSA. Don’t miss out on free money.

Find Scholarship Opportunities Early

There’s lots of free money out there for those who go after it! Start researching scholarships during a student’s freshman year of high school or earlier. Many scholarship opportunities have requirements the student needs to meet early in their high school career. Knowing what various scholarship organizations require can help give direction to a high school student’s academic, sporting and extracurricular activity schedule.

Apply for Student Loans

Don’t Bite Off More than You Can Chew

Loans should always be your last resort for any expense. And, just like a car or house, consider how much you can really afford before you borrow. A good rule of thumb is only borrow what you expect your first year’s salary to be. Do your best to make affordable education choices. Consider community college, online classes, commuting from home and in-state tuition to avoid paying more than you need to for that diploma.

Go Federal Before You Go Private

Maximize your options for federal loans before you consider a private student loan. Federal student loans have benefits that private student loans don’t, like income-based payments and forgiveness programs. You’ll find out what options you have for federal student loans when you submit your FAFSA.

An education is an investment. Be smart about what it costs you — you don’t want to still be paying for it decades after graduation. Consider all of life’s purchases — a first home, vehicle upgrades, starting a business, fun vacations — all of these decisions could be delayed by student loan debt. Don’t spend more than you should and you’ll thank yourself after graduation.