Parents of college-bound students can relate to the anxiety: Their kids are busy taking exams and dreaming about their future. On the other hand, you’re likely wondering how to pay for it all.
According to a recent survey from Money and Kaplan Test Prep, 62 percent of parents of high school students ages 15 to 18 said paying tuition would mean “significant financial sacrifices.” The 2017 “How America Pays for College” report, an annual national study conducted by Sallie Mae and Ipsos, reports that fewer than four in 10 families had created a plan to pay for all years of college before their child enrolled.
Coincidentally, this hot topic is the premise of the comedy “The House.” When middle-class parents (played by Amy Poehler and Will Ferrell) discover the cost of tuition at their daughter’s dream private school, panic sets in. Having never saved for college, the couple turns to alternative means to raise money and starts an illegal casino in a neighbor’s basement.
While taking a gamble—literally—on your child’s future is not a suggested way to save for tuition, many parents are pursuing alternative means.
Crowdfunding the costs
Parents are now tapping the same crowdfunding sites that help entrepreneurs get new businesses off the ground to raise money for a child’s college tuition. Lori Truex, a Michigan-based mother who works as a school bus driver, is simultaneously operating a GoFundMe account and soliciting passersby along her town’s busy main roads to donate to her daughter’s college tuition fund, according to local news station Fox17. Newer, tuition-specific crowdfunding sites offer either the traditional donation-based model or an investment-based model, where contributors stand to make a profit off what they give.
Securing secondary income
Other parents are turning to more traditional means, namely securing a job with tuition benefits or finding a second job to supplement their income.
“Tuition benefits for university employees is something I don’t think a lot of people realize is an option,” says Leah Ingram, author of the upcoming book “The Complete Guide to Paying for College.”
Another modern option is to join the blogosphere. Though monetizing a blog isn’t easy, consider the college process as writing fodder. Thomas Frank started his blog, College Info Geek, in 2010 while he was a student at Iowa State University. His website has since become one of the most-visited college blogs on the internet and has helped him pay off $15,000 in student loan debt before he graduated.
Tuition as a family affair
HSBC’s Foundations for the Future report found that 79 percent of parents contribute toward their child’s education; however, kids can also take an active role. In the months leading up to move-in day, students should be searching for scholarships like it’s a part-time job. Ingram suggests applying across the board to both minimal scholarships ($500 or so) as well as major awards.
“An important thing for parents to remember is that you can borrow to pay for college, but you can’t borrow to pay for your retirement,” Ingram says. According to HSBC’s Foundations for the Future report, 60 percent of parents are willing to go into debt for college costs. However, Ingram adds, “It’s actually very healthy for students to have loans. It gives them skin in the game and it makes them more responsible for their college education.”
Before you can determine which savings strategy is right for your family, take a closer look at your current finances, map out a game plan, be realistic about the costs and start planning early.