Q: I have two kids, 16 and 14. For a few reasons, I wasn't able to save for college when they were younger. Is there a good way to catch up on this? How do I go about it?
A: When it comes to financial matters, trying to play catch-up can be dangerous if it means taking investment risks. With college for your kids roughly two and four years away, you shouldn't put their college money into anything more aggressive than some intermediate-to-long-term CDs. Current CD rates won't add much to the college fund, but at least they won't lose you any of your hard-earned savings.
Here are some things that might help make college more affordable:
- Consider state colleges. In-state tuition for state colleges is generally considerably cheaper than tuition at private colleges.
- If possible, have your kids live at home during college. This will save you significantly on room and board charges.
- Estimate how much money you'll need and how much time you have, and create a savings budget. You may not earn enough to save all that you'll need in the time remaining, but at least you'll know what the target is.
- Look into financial aid. Visit www.fafsa.ed.gov to find out about federal financial aid. Also, check with the guidance office of your kids' high school and the admissions offices of the colleges you have in mind for information on other types of financial aid. Naturally, go for grants and scholarships first, and loans second, to minimize the amount of debt burden your kids build up while in college.
- Consider having them take a year or two off to work before college. It will give you more time to save, and allow them to pitch in as well.
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