This was originally published on Monday, June 17, 2013, in the Pacific Daily News. Click here to subscribe to the PDN.
Tuition costs have been steadily climbing.
Children born today can pay three to four times more than their parents paid for their education. Being prepared to help your children get a good start in life will need some early planning.
Fortunately, there are many opportunities out there to help.
• A Coverdell Education Savings Account, formerly known as an Educational IRA, is a fund that allows you to make contributions for each child until he or she is 18. This account may grow tax-deferred and there are contribution limitations. For more information on the contribution limitations and withdraw options, visit www.irs.gov.
• If you have enough time to invest (best when the child is younger than age 5), think about buying zero-coupon Treasuries, also known as STRIPS, Separate Trading of Registered Interest and Principal of Securities. They’re backed by the U.S. Government and cannot be called or redeemed before the maturity date. There are also education bonds you may want to invest in. For more information, visit www.treasurydirect.gov.
Grants and loans
It’s not uncommon for a family to use a combination of income, savings and loans. Take some time and research different student loans. Student loans offer lower rates and long repayment terms. For more details, visit www.ed.gov.
• Many of us are familiar with a Federal Pell Grant, which doesn’t have to be paid back. But there are other federally funded grants that can help. The Federal Supplemental Educational Opportunity Grants offer $100 to $4,000 a year, which doesn’t need to be paid back. Go towww.ed.gov for more information.
There are many financial aid programs. The aid can be federal, state, or even campus-based. Check with your student’s high school or college counselor for more information.
• If you or your spouse served in the military or as a reservist, or in the guard, look for institutions or scholarships that will reward you for your service.
Your education GI Bill benefits can now be transferred to your spouse and dependents. For more information, visit www.gibill.va.gov.
Maybe your child may be interested in joining the military. All services, including the Coast Guard, have scholarship programs for those who are interested in a military career after college. Have your child talk to the Junior Reserve Officer’s Training Corps at his or her high school.
• There’s a lot of merit aid out there as well. The most popular is the federally funded Merit Scholarship. This type of aid is usually based on your child’s grades and accomplishments. For more information, visit www.nationalmerit.org.
• Your child may consider going overseas for college. Tuition and cost of living may not be so high.
Some overseas schools offer two-year programs versus the traditional four-year programs. In today’s global competitive job market, an applicant who has lived overseas is very marketable.
• Think about starting at a local level and transferring to a state college or university.
Local colleges tend to not be as expensive. Do make sure that before transferring, your child’s credits transfer and he or she will not have to take too many more courses that would negate your savings.
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and with financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at email@example.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.