Saving for Education
Whether you're planning for a child's education or thinking of going back to school as an adult, college or grad school can be an expensive proposition. Fortunately, plenty of tools exist to help you. Here are a few tips to consider.
Start saving now
Maybe you didn't follow the ideal scenario: stockpiling money for college from the moment of your child's birth. Maybe you're ready to return to school yourself, but haven't saved for it. That's understandable-but the sooner you get started, the better. Not only will you have more time to put aside funds, but you could also benefit from:
Compounding. Even if you start with just a small amount, over time compounding could make it snowball into much more.
More aggressive investments. Depending on your situation, you may be able to put money into more aggressive investments (those with higher risk, but higher potential returns) early on, and then move to more conservative investments, as you get closer to needing the funds.
We can help you figure out how much money you may need to put aside.
Learn the tools
There are many different ways to help children and adults save for private ot tertiary education.
Your name or theirs?
If you're planning for a child's education, you'll need to decide whether to save and invest in the child's name or your own. Ask yourself:
Do you hope the child will get financial aid?
How sure are you that the child will attend college?
Are taxes a consideration?
Saving in a child's name can reduce the amount of financial aid the child can receive-so if you're hoping to fund part of the tuition with financial aid, you may want to save in your own name. Plus, funds in some accounts become the child's property as soon as he or she reaches legal age-whether or not the child attends private school or university.
Don't dip into your retirement savings
No matter how tempting it may be, you should probably not raid your superannuation account-or stop investing regularly for your retirement-to fund tuition. After all, you or your child may be able to borrow money for tuition-but you probably won't be able to borrow money to retire.
If you're funding a child's education, don't rely on the child to take care of you financially in your old age, either-your child may have financial or health issues of their own at that time.
Investigate government financial support
Financial aid may be an option for you. You might want to:
Get the facts. Investigate financial support through Centrelink for things such as Austudy. Ask about your current financial support eligibility and how it might change with your financial circumstances. Understanding what support is available well before costs commence for secondary or tertiary education may be extremely useful in considering how you structure your financial affairs
Research scholarships and grants
Private School administrators can provide details of how to apply for these types of financial support. Some research into this well in advance will put you in an informed position.
Ask for help
Finding a smart, systematic way to fund for education can be confusing-even more so because no single plan is right for every person. The best way for you to save and invest depends on your income, tax bracket, the student's age and other personal factors. Seek advice from a financial planner that relates to your specific financial circumstance.
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