How to Prepare Now for That First Tuition Bill

Northwestern Mutual, Guest Contributor High school seniors encounter a series of "lasts." Athletes play their last big games. Musicians perform their last concerts. Finally, they all take that last exam. Meanwhile, their parents manage a hectic schedule and a heap of emotions. One "last" brings tears; another finds them high-fiving in the hall. For families with college-bound students, these milestones soon give way to "firsts": first day on campus, first roommate, first tuition bill. In no time, you and your student will reach these moments. You'll find that, just like senior year, higher education is bittersweet. A college degree can lead to a good job and income. But it's so expensive. How will you afford it? You can't pull enough from your pockets or purse. You want to borrow as little as possible. The best course of action is saving. Putting away money over time, even in small amounts, is a smart way to save and grow college funds. And it's never too late to begin, even if you didn't start saving when your student was in a stroller. Make a plan, not just as parents, but as a family. Involving your child is a great way to teach the value of a dollar (or several thousand of them). Together, you can set priorities and choose actions that make sense for you and your family, now and in the future. You can build this conversation--and your savings plan--on questions like these: What are your other financial priorities? In addition to today's expenses, consider your own future needs. If you funnel money into your child's education, it shouldn't come at the expense of your retirement. To cover college costs, you can use loans and scholarships. You don't have those options for retirement. Don't put your own future at risk. How much income can you set aside? Through short-term sacrifices, you may be able to put away a few dollars. Start a textbook fund by cutting the daily latte, monthly cable bill, and annual trip to the beach. As a family, agree to spend half as much this year on holiday gifts. And, if you happen to have a generous cushion in your checking account, talk to your financial advisor about moving funds into a 529 college savings plan. You may be able to add five yearsï ¿ ½ worth of contributions in one yearï ¿ ½as much as $70,000 for an individual student. That could go a long way toward tuition or room and board. How do you expect your student to contribute? Maybe your goal is to relieve your child of financial burden by funding as much of education as you canï ¿ ½all of it, if possible. Or, maybe you believe students should take responsibility for at least some of their own expenses, whether by contributing income, earning scholarships, or securing a loan. Discuss your values and priorities as a family. Make sure your child knows how much education costs. Learn together about options for saving and borrowing money. Talk about the pros and cons of debt. What's the best place for you to deposit and grow savings for higher education? Today, you have more options than ever. Some provide tax advantages; others give greater flexibility for using the funds. Some you may already have in place; others you never even knew existed. The choices include 529 plans, investments, permanent life insurance, Roth IRAs, and more. Each has pros, cons, and restrictions. You can learn the basics in Save for College with Confidence: Your Guide to Education Funding, a resource published by Northwestern Mutual. Research the options, then get input from a financial advisor about which funding strategy makes the most sense for you and your student. Funding an education is a daunting responsibility. The first tuition bill may bring tears to your eyes. But eventually, you or your student will make that last payment, and you'll be high-fiving in the hall. Northwestern Mutual, Guest Contributor High school seniors encounter a series of "lasts." Athletes play their last big games. Musicians perform their last concerts. Finally, they all take that last exam. Meanwhile, their parents manage a hectic schedule and a heap of emotions. One "last" brings tears; another finds them high-fiving in the hall. For families with college-bound students, these milestones soon give way to "firsts": first day on campus, first roommate, first tuition bill. In no time, you and your student will reach these moments. You'll find that, just like senior year, higher education is bittersweet. A college degree can lead to a good job and income. But it's so expensive. How will you afford it? You can't pull enough from your pockets or purse. You want to borrow as little as possible. The best course of action is saving. Putting away money over time, even in small amounts, is a smart way to save and grow college funds. And it's never too late to begin, even if you didn't start saving when your student was in a stroller. Make a plan, not just as parents, but as a family. Involving your child is a great way to teach the value of a dollar (or several thousand of them). Together, you can set priorities and choose actions that make sense for you and your family, now and in the future. You can build this conversation--and your savings plan--on questions like these: What are your other financial priorities? In addition to today's expenses, consider your own future needs. If you funnel money into your child's education, it shouldn't come at the expense of your retirement. To cover college costs, you can use loans and scholarships. You don't have those options for retirement. Don't put your own future at risk. How much income can you set aside? Through short-term sacrifices, you may be able to put away a few dollars. Start a textbook fund by cutting the daily latte, monthly cable bill, and annual trip to the beach. As a family, agree to spend half as much this year on holiday gifts. And, if you happen to have a generous cushion in your checking account, talk to your financial advisor about moving funds into a 529 college savings plan. You may be able to add five yearsï ¿ ½ worth of contributions in one yearï ¿ ½as much as $70,000 for an individual student. That could go a long way toward tuition or room and board. How do you expect your student to contribute? Maybe your goal is to relieve your child of financial burden by funding as much of education as you canï ¿ ½all of it, if possible. Or, maybe you believe students should take responsibility for at least some of their own expenses, whether by contributing income, earning scholarships, or securing a loan. Discuss your values and priorities as a family. Make sure your child knows how much education costs. Learn together about options for saving and borrowing money. Talk about the pros and cons of debt. What's the best place for you to deposit and grow savings for higher education? Today, you have more options than ever. Some provide tax advantages; others give greater flexibility for using the funds. Some you may already have in place; others you never even knew existed. The choices include 529 plans, investments, permanent life insurance, Roth IRAs, and more. Each has pros, cons, and restrictions. You can learn the basics in Save for College with Confidence: Your Guide to Education Funding, a resource published by Northwestern Mutual. Research the options, then get input from a financial advisor about which funding strategy makes the most sense for you and your student. Funding an education is a daunting responsibility. The first tuition bill may bring tears to your eyes. But eventually, you or your student will make that last payment, and you'll be high-fiving in the hall.