Majority of students use college student loan. It means that student are owed by private and federal student loans even after graduation.Despite the loans being helpful, they are also a big burden.However, your child does not have to study on college student loan.You need to start preparing for the education of your child. You should save what you can to reduce the burden of student loan. Below are a few ways you can save for the higher education of your child.
You need to keep in mind that each penny means a lot. The earlier you start saving, the bigger the savings will be. Come up with a budget that you can stick to so as to grow your savings.You can opt to cut back on expenses such as transportation, entertainment and utility costs. The initial savings may be small but eventually they will add up.
Think about the benefits of Roth IRA.Roth IRS also covers college costs regardless of it being an individual retirement account. The money is usually tax free.You can use the money to invest in stocks and bonds. The good thing about Roth IRA is that withdrawals for contributions are penalty free.
Consider opening an education savings account.It is preferable than a regular savings account provided you can save more than $2,000.The savings plan is tax free.Making education expenses withdrawals is tax free.Also, you are free to pick different investment options.You have the flexibility of growing your money.
Also, you can choose to have a 529 education saving plan. It is a great alternative if you don’t qualify for an education savings account. 529 plan can be used for withdrawing against different college cost. Apart from tuition, it also covers board and room.Once the money is withdrawn, it can be used in different universities and colleges.This plan offers the option of changing the beneficiary’ name.
Consider an educational trust fund for your child.The beneficiary will be the child and a different person the trustee. The work of the trustee is to ensure the funds are used for your child’s education. Your kid needs to show the bills to the trustee.
Another way is to become a rental property owner.You still maintain your work while making money on the side. Provided you choose your tenants wisely, you will build a long term relationship.
In addition, you need to master the art and science of house hacking. House hacking means that your housing costs are catered for by others. You can choose to rent out a section of your property if you cannot afford to buy rental properties.