Without ample funds put away in a savings account, your child can face financial consequences when it comes to paying for their college education—especially if they need to take out a student loan. For this reason, parents should spend time looking at other strategies to cover the costs of higher education. The guide below offers advice for keeping tuition fees manageable.   

3 Ways to Minimize Your Child’s Need for Student Loans

1. Stay Local

A high-quality university education doesn’t have to require your child to move far away. Community college, for instance, can help undergraduates rack up core credits at a fraction of the price it would cost at a state or private institution. If your child goes this route, they can take more time to refine their educational trajectory and, if they choose, transfer to a four-year college.

If community college isn’t a compatible fit, your student might also take advantage of in-state tuition discounts. In 2019, undergraduate in-state residents enrolled in the Nebraska State College System paid $181.50 per credit hour as opposed to $363 per credit hour for non-residents.

When your child stays local for higher education, they might also be able to continue living at home, where they will save a considerable amount of money on room and board.

2. Open an Educational Savings Account

A Coverdell Educational Savings Account (ESA) is a custodial account that parents and other family members can take out for a child expecting to attend college. Contributions are tax-deferred and withdrawals used for qualifying education expenses will not require tax payment.

The earlier you create the savings account, the better, as it will provide more opportunity to collect interest and take advantage of the $2,000 yearly maximum contribution limit. If your child doesn’t pursue higher education or receives a scholarship, the funds can be rolled over to another prospective college student in the family.

3. Investigate Tuition Payment Plans

If you earn enough to cover tuition for your child but do not have the flexibility to pay for it all upfront before semesters start, consider a tuition payment plan. Many schools offer these programs so you can pay tuition fees in installments, usually with reduced interest requirements.

If you’re a parent of an aspiring college student in Lincoln, NE, Spirit of America Financial Credit Union will help you explore smart financial strategies. Dedicated to providing low-cost solutions for residents, this NCUA-insured institution offers Coverdell Education Savings Accounts that will help you prepare for university expenses. To learn more about these and other services—such as affordable checking accounts and low-interest credit cards—visit this credit union online. For questions, call a friendly associate at (402) 467-1102.