planning for college?

Here are six financial tips for anyone looking at their kids’ college options

College is expensive, and there’s no doubt about that. But whatever your financial situation, there are things you can do to make it more affordable. No matter where your budding college student has set his or her sights, these tips can help make sending them to college work out financially.

Start saving now

The earlier you start saving, the easier it will be to set aside the money you’ll need to put your child (or children) through college. Thankfully, there’s an account specifically designed to make the most of your college savings: the 529 account. When contributing to a state-sponsored account like CollegeAdvantage, Ohio's 529 Plan, contributions may be deductible from taxable state income up to an allowable amount. Currently, if you live and are investing in an Ohio-sponsored plan, Ohio allows up to $4,000 deducted per beneficiary annually, with unlimited carry forward, and if you live and are investing in an Indiana-sponsored plan, Indiana awards a tax credit for 20% of yearly contributions up to a value of $1,000. On the other hand, Kentucky offers no deduction or credit for residents to invest in the Kentucky-sponsored plan.¹

Keep in mind that federal income tax still applies to 529 account contributions. Much like a Roth IRA, contributions to these accounts and any earnings, including interest and investment growth, are tax-free as long as withdrawals are for qualified higher-education expenses. Ohio’s main 529 plan, CollegeAdvantage, offers diversified investment options that present a great opportunity to grow the balance of the account tax-free. You don’t even have to live in Ohio to take advantage of the plan—it’s accessible to in-state or out-of-state savers and can be used for in-state or out-of-state colleges.

As a reminder to keep this account growing over time, take the money you may have spent on one of your child’s birthday gifts each year and add it to their college savings account.  Or, when the grandparents or a long-lost great-aunt asks what they want for their birthday, ask for a contribution. Adding even a little bit every year can add up to a lot and most likely your little one won’t notice one less gift from Great Aunt Sue.

Plan beyond tuition

Paying for college is about more than just tuition, which covers the cost of attending classes. Your student will also need to pay for books and other supplies, room and board, and non-tuition fees. Schools often present this information as an estimated total cost of attendance, which can help you add detail to your plan.

The variation is particularly evident when comparing public schools like Ohio State, University of Kentucky, University of Cincinnati, or Miami to private schools like Xavier, Kenyon, or University of Notre Dame. Public schools typically offer steep discounts on in-state tuition compared to the cost of attending a private school, but even out-of-state students can expect to pay more at a private institution.

For instance, a year at Xavier is nearly three times as expensive as a year at UC for an in-state student after accounting for tuition and other costs. That gap narrows somewhat when you consider financial aid, according to Xavier’s financial aid calculator. Whether you choose public or private schools, pay attention to the out-of-pocket cost for your family, rather than the advertised cost.

Apply for all the financial aid you can

The first step in getting financial aid is filling out the FAFSA (Free Application for Federal Student Aid), which helps your student apply for need-based federal aid. It’s a good idea to fill out the FAFSA even if you don’t think you will qualify—it’s better to know for sure than to miss out on aid. Pay close attention to deadlines and submit your FAFSA as early as possible, since some schools award aid on a first-come, first-serve basis.

For participating private colleges, your child should also fill out the College Board’s fee-based CSS Profile to be considered for the school’s need-based aid. You can see if your child’s prospective college uses the CSS profile by checking the College Board website or contacting the school.

Next, have your child search for relevant private scholarships with qualifications that match their situation or needs. In many cases, scholarships are awarded based on your student’s area of study, heritage, identity, or a niche hobby. So, get creative with those internet searches. And if you want to prioritize awards with simple application processes, you can find updated lists of “no-essay” scholarships online.

Account for tuition increases

Unless a school specifically guarantees full tuition for four years—as Ohio State and Miami do for certain students—assume that tuition will increase every year. Your financial advisor will typically assume that tuition will increase by 3% to 5% annually. If you want to be more conservative, you could plan for a tuition increase as high as 8%. When the school informs you of its next tuition hike, your child can also contact the school’s financial aid office to see about additional assistance. And remember, your student will reapply for financial aid every year regardless, so the aid package will continue to evolve.

Work on campus

If a student receives a work-study award as part of a financial aid package, they’ll be eligible for part-time work in a variety of on-campus jobs. Without work-study status, a student will have to seek jobs that don’t require it. The work-study office may have that information. Your student can also investigate the school’s resident assistant (RA) program. Typically, an RA receives reduced room and board in exchange for taking on a peer-leadership role at a residence hall.

The best plan is to start saving for your child’s college education as soon as you can. As the college years approach, financial aid and federal loans can help supplement your savings so your student can pursue the education they want and need.