If you’re a parent who is going back to school with student debt, should you start saving for your kids’ college fund while still trying to pay off debt? Here are some ways you can approach this conundrum and actually do both:
Prioritize Yourself First
“Remember that being financially stable yourself is the best financial gift you can give your child,” says Emily Guy Birken, author of The 5 Years Before You Retire. “Parents do need to prioritize their own finances ahead of saving for kids’ college funds,” Guy Birken explains. “Paying for your children’s college education is a lovely gift, but your kid doesn’t want a paid-for college education if it means they will have to support Mom and Dad in their old age.”
Remember: You’re the only one who can get yourself out of debt. Nobody, including your kids, can do it for you. It’s important to make sure your financial wellbeing is taken care of first. If you’re going back to school to earn more money, you could consider ramping up on saving for your kids’ college after you graduate and land a job.
Make Sure You’re on Track
If you’re taking time off to go back to school and have requested a student loans forbearance or deferment, figure out a repayment plan for when it’s time for you to pay back your loans. You can look into options such as consolidating or to see if you qualify for a student loan forgiveness program. There are forgiveness programs for those who work in public service, for teachers, and depending on which state you live in, there may be programs for lawyers and doctors. Know what your options are and crunch some numbers to determine when you’ll realistically pay off your student loans by.
However, there are definitely ways you can both save for your child’s college fund while paying off, says Robert Farrington of The College Investor. It just takes a little bit of balance. Here are some ways you can go about saving for this hefty expense:
Open a 529 Plan
A 529 plan is a great way to save for your child’s college fund. The money in a 529 account grows tax free, and once your child reaches college age, they can use the money saved toward expenses for higher education such as tuition, fees, and textbooks. Guy Birken points out that depending on the state you live in, you can save as little as $10 at a time, and you can set up recurring transfers.
Open a Upromise Account
With a Upromise credit card you can earn money to put toward a 529 simply by shopping. For every purchase you make on your credit card you earn a percentage for your child’s 529 account. You can also earn points by shopping online through the Upromise website.
There are also a handful of other credit cards that can help fund your child’s college. Instead of accruing points to redeem for travel or cash back, the points can be used to fund a 526 plan.
Have Your Child Do Part of the Saving
If you have a teen, you can talk to them about how much you’re able to contribute to their college education, and how much you expect them to be responsible for. You can work together to come up with ways they can help foot part of the bill for their higher education, such as applying for scholarships, saving part of their earnings from a summer or afterschool job, or starting their own business.
It’s also important to teach them how student loans work, so they know what their responsibilities are when they graduate. You can also put your heads together to talk about ways they can keep their expenses down while in college, too.
Ask Friends and Family to Contribute
“One of my favorite ways is to ask friends and family to contribute to a 529 plan for your child in lieu of birthday or Christmas gifts,” says Farrington, who asks his relations to give his children a few toys on occasion, as they already have many. You can request a gift card from a site such as Leaf, where you can put redeemed gift cards directly toward a 529 plan.
It’s really is a tough call to decide whether to start saving for your kids’ college fund when you still have student debt to pay off. Buy knowing your priorities and coming up with a sound plan will help you strike a balance.