How to prepare your child for college: start a better future now

While graduation celebrations fuel the fun and festivities of the summer, many families can also use this time to better plan the next steps on the journey to college. When it comes to preparing your child for college, there’s no better time to start than now. Time is always an advantage when it comes to meeting your education savings goals. No matter how close your child or grandchild is to starting college, there are always opportunities to save smarter.

How to pay for college for your child

When kids are young, many parents assume that they’ll go to college; however, despite this early assumption, parents often wait years to take the steps to make this goal a reality. As your child gets closer to college age, be sure to choose the college funds that best fit you and your family.

• 529 Savings Account. A 529 plan is a tax-advantaged account that invests savings to generate more earning power than a traditional savings account. A 529 is easy to open, has no minimum contribution, and allows friends and family to contribute, making it a popular tool to help meet education savings goals.
  
• Coverdell Education Savings Account (ESA). An ESA is like a 529 in that it allows savings contributions to grow more effectively than they would in a traditional savings account. An ESA allows account owners more investment freedom; however, other rules and restrictions apply in terms of contribution limits and tax benefits. 
  
• IRAs. Retirement savings can now be used as a source of funds to help pay for college. Regulations have changed, so you’ll avoid the 10% tax on early withdrawals before age 59½ if you use the money to pay for qualified education expenses. Rules are different for traditional and Roth IRAs, so be sure to understand the pros and cons before using retirement funds.
  
• Financial Aid. All students going to college should fill out the Free Application for Student Aid¹ (FAFSA) to check eligibility for federal assistance. The best part about financial aid is that it can help families learn about assistance options they might not have considered. The scholarships, grants, and work studies that may be offered are all essentially “free” money — they do not have to be paid back.
  
• Loans. Public and private loans area available to students and parents to provide the extra funds needed to help pay for college. When considering loans, applicants should shop around to ensure they’re getting the best rates, and understand all the terms and conditions of the loans. It’s important to pay extra attention to how interest is calculated when the student is in school.
  

How to Best Prepare Your Child for College

Even though finances and GPAs dominate discussions about going to college, you’ll also want to help your child prepare for the challenges of college life. No matter what school they’ll attend, students will be better equipped for success if they have a firm understanding of the following attributes.

• An interest in learning. Help your child develop a thirst for learning new things and get a better sense of their developing passions and interests. This motivation will help them enjoy the challenges of schoolwork, and they’ll be more self-driven to succeed.
  
• A love of reading. Reading opens the mind to other ways of thinking and expression. If your child is still young, foster a passion for reading by reading to them and make reading time fun. If your child is older, look for books and writings based upon their interests.
  
• Growing independence. Give kids more control in planning events with their friends, or let them attend summer camps or volunteer opportunities where they will get accustomed to meeting new people.
  
• Financial accountability. Whether your child has an allowance or a job, giving them the chance to control their finances will help them see the importance of being responsible with money and living within their means. If possible, help your child set up a savings account.
  
• Life skills. Make sure your child understands the value of a good diet and exercise, and knows common skills like cooking, cleaning and time management.
  

College Preparation Checklist

To best meet your college education savings goals, it’s ideal to save now and start early. By the time your child enters middle school, you should have an active education savings plan in place. Here are some things you can do to make sure children are prepared for college.

Before middle school

• Start saving for college.
• Help your child develop reading skills and an interest in learning.
• Track report cards and get a sense of their academic strengths and challenge areas.

Middle school

• Continue/start saving for college.
• Introduce the idea of going to college.
• Help your child start thinking about how their interests can translate into a career.
• Keep in contact with your child’s school and teachers to monitor academic behavior.

High school

• Continue saving for college.
• Talk with your child about choosing the right college and being realistic about where they apply.
• Investigate public/private scholarship opportunities and financial aid options.
• Make sure the FAFSA form is filed at the appropriate time².