Like so many of us parents today, you might be wondering how you are going to afford college for your child.
Your stocks and funds took a dive this year…and the bad news doesn’t end there. If you have money set aside in 529 College Savings Plans or UGMA accounts, they took a beating as well. I know this because it happened to me too.
Let me tell you what I’m doing about it — maybe this can help you too.
First, understand that my middle daughter is a senior in high school and she is planning on starting college in nine months. I started saving for her schooling the day she was born and everything was on track…until the market wiped out 25% of her account. I don’t want to alter our investment strategy and I certainly don’t want to sell her investments at these low prices. I’m sure you get it. So what to do?
If you are in this same boat, you and I have a few options.
Here are a few suggestions on how to afford college:
a. Send the child to a lower-cost school. To be frank, I love this one. My experience tells me that the quality of college education doesn’t increase with the price tag. Give your kid an inexpensive lesson in economics — teach them that smart people don’t spend money they don’t have. I guarantee that such a shift, if needed, will enhance their college experience.
b. Introduce your child to the concept of part-time work or a paid college internship. She’ll appreciate college much more having paid for at least some of it. It’s time that the kids understood that Mommy and Daddy don’t have inexhaustible funds.
c. I really like the two steps I just wrote about, but if you need more, you could pay for the first year or two and allow the accounts more time to recover from the financial meltdown. Then, you could pay yourself back a few years down the line.
d. My strong suggestion is not to take student loans. Don’t saddle your kids with debt and worse, don’t encourage the misconception that it’s OK to spend money they don’t have. That is the wrong lesson to teach — especially in these times.
If you’ve been caught in this situation, what steps are you going to take? Would you be able to use these ideas with your kids? If not, why not?
Want a Free e-Course and Report on how to invest like a genius?
Just subscribe to Wealth Pilgrim and they are yours for free. Don't waste another day being confused about how investments work or how investment advisors work or how investment advisors work. Take back control of your financial life once and for all - for free!
Click Here to Sign Up For Our Free Newsletter!
Neal Frankle is a Certified Financial Planner™ with over 25 years experience. Subscribe today and tap into this wonderful, free resource!
I liked Suze Orman’s advice that money you intend to spend in the next 4 years has no place in the stock market. When your child enters high school, take their college money OUT of the stock market.
Personally, I consider the stock market to be glorified gambling. And when you gamble, you will lose from time to time.
As for your suggestions, I pretty much completely agree. Student loads should be avoided if at all possible. I haven’t attented college yet. My debt is bad enough without having the additional burden of having to pay off student loan debt. Thank the Maker.
Trey,
Thanks for your thoughtful comment. I agree with your thoughts about college funding.
I would also say that the stock market is certainly gambling for those who speculate and demand short-term results. For people investing for 10 years or more the market has been a great way to invest.
I wish you every success in college.
Very interesting site, i will visit you eften, greetings
Comments on this entry are closed.