The cost of college tuition is on the rise, and saving for your children’s college education can be a daunting task when you’re a single parent. However, with some careful planning and dedication, it is possible to save for college and give your children the best possible future. Here are some tips for single parents to save for their children’s college education:
Single parents should invest as soon as possible in their child’s education. Starting while the child is young will allow the parent to take advantage of compound interest and give them more time to save. You can even start small with investment accounts like Roobinhood and Acorns. Sign up with Robinhood and get $5-$200 in free stock.
Utilize Tax Credits:
Single parents should also look into taking advantage of federal tax credits, such as the American Opportunity Credit, which can help offset college tuition costs.
Open a 529 College Savings Plan Account:
A 529 plan is a tax-advantaged savings plan designed to encourage saving for future college costs. 529 plans are available in most states and can be opened with as little as $25.
Contributions to a 529 plan are not deductible from federal taxes but may be deductible from state taxes. Earnings on the investments are not subject to federal or state taxes as long as the money is used for qualified higher education expenses, such as tuition, fees, books, room and board, and other related expenses.
The account owner has control over the account and can change the beneficiary at any time, even to another family member. The account owner can also change the investment strategy to adjust for changing college costs and the student’s changing needs. Withdrawals from a 529 plan must be used for qualified higher education expenses; otherwise, the earnings are subject to income tax and a 10% penalty.
However, the account owner can roll over the funds to a different 529 plan without penalty. In addition, states may offer various tax benefits for contributions to 529 plans, such as deductions or credits. Also, some employers offer matching contributions when employees contribute to their own 529 plans or those of their children.
Apply for Scholarships:
Scholarships are a great way for single parents to save for college. Parents can look for scholarships for their children that are specifically designed for single parents or students from low-income households.
Additionally, there are scholarships for students based on academic excellence, athletics, and other areas of interest. Parents should also investigate local scholarships, as many organizations offer scholarships to area students.
Start at a Community College:
Don’t be afraid to start at a community college and transfer later. Community college tuition is often much cheaper than traditional four-year universities and transferring credits can save a lot of money in the long run.
Consider Working Part-Time:
Working part-time while in college can help single parents save money on college costs. Many schools offer work-study programs which allow students to work part-time and earn money to put towards their tuition fees.
Take Advantage of Employer Benefits.
Many employers (Like Starbucks, Verizon, Amazon etc.) offer tuition reimbursement benefits and other incentives for employee’s children to pursue higher education. Single parents should check with their employer to see what benefits are available.