It's Time for Your Child to Start College and You Haven't Saved Enough

DALLAS, July 10, 2012 /PRNewswire/ -- Saving for college is a challenge for most parents today, but when the time comes for your child to leave and you haven't saved enough, what do you do? Dallas Financial Advisor Derrick Kinney, principal of Derrick Kinney & Associates, wants you to know that you're not alone and you have options.

"The overwhelming feeling when you realize you're not financially prepared to send your child to college is one that many parents share. Just as kids feel pressure to get into their dream school with a big name and reputation, parents can feel pressure to pay that dream school's tuition," said Kinney. "We all want the best education for our children to give them a bright future. But think long and hard before you break into your retirement piggy bank to pay for it."

Although we all want to keep up with the Joneses, the key is to spend within your means. Your first reaction may be to pull funds from every account you have including your retirement, but sending your child to the priciest school possible is not worth sacrificing your life savings.

At a time like this, it's important to take the right steps to move forward and ease your financial burden. First, have a critical conversation as a family. Sit down with your child and discuss how much money you have saved, the cost of college, and how much cash you have to work with. Don't sugar-coat your situation. Make sure everyone understands where you stand financially. Once you're all on the same page, consider these options, he said.

Option #1 - Let community college cure your ailing finances

Sending your child to community college for a year or two could be the right choice. The credit hours students earn typically transfer to four-year institutions. That's just the beginning of community college benefits.

According to the College Board, the average community college costs $2,690 yearly while the average public four-year college costs $8,240. That's more than $5,000 per year that you save with community college. If your child has a private school in mind, the average tuition is $28,500 yearly. Community college can save you $25,000 per year in comparison.

"Community colleges normally offer more flexible scheduling and smaller class sizes than four-year institutions. This way, your child can work while attending school and have the benefit of an easily accessible professor who knows them by name. They also provide an opportunity for your child to explore different majors without breaking the bank. So if your child, like many students, changes majors after a year, you're not out thousands of dollars," he said. 

Option #2 - Take some time off but don't turn your brain off

Instead of starting college immediately after graduation, some families choose to defer one year so their child can work and save tuition money.

"While this option is great for teaching the value of the dollar, it can also be dangerous," he said.

Research shows that many kids who take a year off school never return. Either they like their job and see no need to continue their education, or they haven't saved enough and can't afford tuition.

When considering this option, be realistic about the type of person your child is. Is he/she a hard worker? Is education a priority? Is he/she disciplined enough to save money for the following school year? If you answer no to any of those questions, taking a year off could be the wrong choice.

"If this option seems like the right one, consider providing extra incentive to save money. For example, make a deal that for every $200 they earn for school, you will match it. This way, your family works as a team to earn college money and your child feels supported in their efforts," he said.

Option #3 - Don't skip on the scholarships

With a large number of scholarships available, it's always in your child's best interest to apply. Many students avoid scholarship applications because they think they will have to be an excellent essay writer, or that the scholarship is such a long shot it's not worth applying for. Some students may think scholarships aren't available to them or that there's no point in applying if the award is small.

"However, these can be costly misconceptions. By going to a website or school counselor, your child can see exactly which scholarships they're eligible for and how to apply. The more scholarships your child can obtain, the less your wallet has to strain," he said.

For more information go to http://www.derrickkinney.com/

SOURCE Derrick Kinney & Associates