Strategies for the Ages
Sticker-shock survival: the right moves for families to make
Experienced parents like Horton treat paying for college like a business. And like any business, Payingforcollege Inc. should start off with some working capital. Ideally, parents should start saving for college the day the child is born. But whenever they start, independent financial aid adviser Karen Busanovich of Woburn, Mass., suggests parents augment their own savings by asking family members to forgo traditional kids' gifts such as toys, or low-yielding savings bonds, in favor of donations to a 529.
The next important milestone is the start of school. When their oldest daughter, Cameron, was getting ready to start kindergarten, David and Leah Kauffman were feeling a little cramped in their small San Antonio house. But after they did the math, they realized that moving to a bigger house in a cheaper neighborhood would end up costing them more, since they'd be leaving an excellent public school district and would probably end up sending their daughters to a private school.
The Kauffmans also used kindergarten as their launching pad for college savings. The parents were briefly tempted to enjoy spending the $300 a month they had been devoting to Cameron's day care. But they buckled down and started sending that money to a 529 account instead. "It is not like you are spending new money; you are just shifting it, so it doesn't hurt as much," says David Kauffman. And by having the contributions automatically withdrawn from their checking account, they aren't tempted to spend it.
Of course, parents should always encourage their kids' academic studies and special talents, but counselors say the middle or junior high school years are crucial. "For my friends, I recommend they talk to the child's teachers and guidance counselors," says Bernie Pekala, head of financial aid for Boston College. "If they say 'Oh, she's such a bright child, but ... ' then the child is not performing to the best of her ability" and should receive extra tutoring in subjects, test-taking, or study habits.
These are also the years that will help determine whether your student should consider pursuing any specialized scholarship such as one for, say, music or soccer. While there are always a few late bloomers who walk on to college teams, most of the money is handed out to kids who've spent years training and succeeding. "If they are joining the clubs and getting into select teams by the time they are 14 or so, you've got a chance," says Meridy Glenn, coach of the University of Cincinnati's women's soccer team.
Academics first. Glenn warns parents against pushing students too hard and creating a burned-out kid who won't get anything. Glenn is letting her own two kids explore the activities they enjoy, while emphasizing homework. "You don't want to put all your eggs in athletics," she says. The numbers bear her out: Less than 1 percent of college students receives athletic scholarships, while 49 percent get some kind of need- or merit-based grant.
By the sophomore year of high school, athletes should start researching likely schools and E-mailing coaches asking to be scouted, while parents should start estimating their chances for need-based aid by using an online calculator. If they don't have a shot, parents should start making tax moves, such as giving monetary gifts to the child, and focus on merit aid. Those who might qualify for need-based aid should increase their chances by, for example, moving savings out of the child's name and into a 529 or spending it on summer camp or anything else for the child's benefit.
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