Saving For School: It’s Never Too Early To Prepare For the Future Reply

Few things can be as heartbreaking for a family as the inability to pay for school. Saving for school, which may seem far off in the future, takes a backseat to the immediate household priorities and bills. Finally, the day arrives when teenagers must decide next steps or parents must seek better employment. At this point, the future arrives, but no one has prepared for it.

What’s At Stake

According to the United States Department of Labor’s Bureau of Labor Statistics, workers with college degrees earn almost twice as much income per week as workers without one. A college degree also cuts the probability of unemployment in half. Over a lifetime, these gaps add up to hundreds of thousands of dollars in earnings gains. From this wider perspective, school is a low-risk investment in the future. It is all but guaranteed to pay off. School does not pay off when you do not go, and takes much longer to pay off when you owe astronomical student loans.

saving-for-schoolWhy Saving Early is Critical

Scores of uninformed people believe financial aid will cover all their school costs. They do not understand how the Application for Federal Student Aid works. The FAFSA application factors household income, household size, household assets and debts, and family members in school with their combined costs. This information generates a Student Aid Report, setting an estimated family contribution based on scaled standards. If the government determines you can afford to contribute X Amount of dollars to school costs, then schools will deduct X Amount from grants they offer you and suggest student loans for the rest. Without savings, student loans add up or college is not affordable.

Tips on Saving Early

As early as you can, invest in an IRA, 529 Plan or other tax-deferred savings product you prefer. Pay off or minimize household debt. Refinance and consolidate debts to lower payments. Then, put the interest and principal savings aside for school. A local financial institution like Union State Bank can help you explore your options. Encourage part-time jobs for teens aiming to go to school and try one yourself, for savings income only. Lastly, make saving a fun family project, and encourage all to chip in on little things to lower bills and conserve resources.

As the costs of higher education rise every year, preparing early is essential. As soon as parents can afford to begin and children can contribute, saving for school must be a family affair. Doing so can mean the difference between future stability and generational wealth, or underemployment at best and poverty at worst.


Kara Masterson is a freelance writer from Utah. She enjoys tennis and spending time with her family. Kara recommends looking into diplomacy programs for more information on degrees that can help save the world.


All views and opinions of guest authors are theirs alone and are not representative of the views of Petersons.com or its parent company Nelnet.

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