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Financial Planning for College: 10 Things U Should Plan For

U should be proud: You have a student with a bright future and college on the horizon. Congrats! At UMe, we know that planning for college can feel overwhelming, but with your favorite Burbank credit union on your side (that’s UMe) — we will do our very best to make sure U can be prepared for just about anything!

The rising cost of college is a major concern for many families. Tuition, room and board, and other expenses add up quickly, potentially making it seem like a challenge to plan financially. The mere thought of taking on significant student loan debt to cover these costs can feel stressful and overwhelming, but never fear! We’re here to help U. Here are proactive steps U can take to make college more affordable for your child. Read more below and get a leg up!


Common Tasks to Take Care of Now 

(to set yourself up for success!)

Parents can experience various obstacles when saving and preparing for their child’s college education. Knowing these potential hitches can help U make smarter, more informed and strategic financial decisions to secure your family’s future.


1. It’s Never Too Late To Start (So Start Now!)

Procrastination is the enemy when it comes to college savings. Starting to save for college when your child is young gives compound interest more time to work its magic. Even small amounts saved each month can grow immensely over the years with consistency.

Talk to your kids about the importance of saving for college early on! Make a plan to have them contribute some of their own money into a savings account. (Check out our Student Banking portal for some great options!) This will help them understand the value of planning ahead and give them a sense of ownership in their education.


2. Choosing the Right Savings Vehicle(s) — It Might Be More Than One!

Not all savings options are equal. Some accounts offer significant tax advantages when saving specifically for higher education costs. A 529 Plan is a state-sponsored investment account that grows tax-free as long as withdrawals are used to cover qualified educational expenses.

California parents can access the ScholarShare 529 Plan, a tax-advantaged investment account for college savings. A financial advisor can help you understand the options available and determine which plan best fits your family’s needs.


3. Take Advantage of All the Tax Breaks

The cost of college might be intimidating, but several tax breaks are available for your family. Tax credits, such as the American Opportunity Tax Credit and the Lifetime Learning Credit, can reduce the amount you owe when filing your tax return.

Keep accurate records of your education expenses, including tuition, fees, and course materials. These documents will be necessary when claiming tax credits or deductions. Consult with a tax professional to ensure you maximize your benefits and file correctly.


4. Understand Financial Aid Options

The FAFSA (Free Application for Federal Student Aid) is your gateway to scholarships, grants, work-study, and loans. “Free money” should always be your top priority, so considering all types of financial aid is essential.

Start researching financial aid options early, and don’t make assumptions about your eligibility. Many factors, such as your family’s income and assets, can affect your aid package. To maximize your aid chances, apply for as many scholarship (like the UMe Super Awesome Scholarship!) as possible once they become available.

Additional reading: Are Credit Cards Good For College Students?


5. Know the Reality of Student Loans

While saving as much as possible is great, many families must supplement savings with student loans. However, rushing into student loans without careful and educated consideration can create a hefty burden later. Have a realistic discussion with your child about their field of interest, and its potential earning power, and a plan for responsible repayment if they need loans.

Educate yourself and your child about the differences between federal and private student loans. Federal loans often offer more flexible repayment options and borrower protections. Understand the long-term implications of taking on debt and research all other funding options before resorting to loans.

UMe Pro Tip: Helpful Tips For Paying Off Student Loans Faster


6. Be Realistic About Student Loans

Loans can be useful, but taking on too much debt is risky. Before taking out loans, clearly understand how much you can afford. Research the average starting salaries in your chosen field to create a realistic repayment plan.

Consider the long-term impact of student loan debt on your child’s future, including their ability to save for retirement, buy a home, or start a family. Encourage your child to explore alternative funding options, such as part-time jobs, scholarships, or grants, to minimize their reliance on loans.

Also see: UMe’s Helpful Tips For Paying Off Student Loans Faster


7. Calculate the Total Cost of Attendance

College isn’t just about tuition. There are also many other expenses, including room and board, textbooks, transportation, meals, and more. Make sure your financial plan accounts for everything. Ignoring these hidden costs can lead to unpleasant surprises.

Research the total cost of attendance for each college your child is considering. Use net price calculators to estimate out-of-pocket expenses after applying for financial aid. Plan for unexpected costs, such as travel for family visits or emergencies, and create a contingency fund to cover these expenses.

Check out UMe’s College Savings Calculator here!


8. There is No ‘One Size Fits All’ (U are unique!)

The average tuition for a four-year in-state university across California is rising. But that doesn’t mean your child has to attend a costly university! Community colleges can provide the first two years of a bachelor’s degree, enabling students to transfer to four-year schools and save money.

Explore various options, such as trade schools, online programs, or starting at a community college before transferring. Think about your child’s unique needs, goals, and learning style when deciding their education path. The most expensive option isn’t always the best fit.


9. Create a Detailed Budget

Tracking your expenses is crucial for managing your college finances. Create a budget that includes both the big costs and the smaller ones. This way, you’ll know exactly where your money goes.

Involve your child in the budgeting process to teach them valuable financial skills. Use budgeting apps or spreadsheets to make tracking expenses easier. Review and adjust your budget regularly to stay on track.


10. Have Financial Conversations With Your Students and Family

Money can be a touchy subject, but open communication between students and their families is key. Talk about financial realities, expectations, and everyone’s contributions. Brainstorm ways to save money or look for scholarships together.

Make financial discussions a regular part of your family conversations. Encourage your child to ask questions and share their concerns. Foster a supportive and non-judgmental environment where everyone can work together to achieve your college funding goals.


More Tips for Smarter College Savings

Saving for college doesn’t have to be overwhelming. You can take control and lessen the financial burden with the right strategies. Here are some tips to help you build a strong foundation for your child’s future education:

  • Budget Wisely: Track your monthly income and expenses to see where you can create a dedicated fund for college costs. Even small amounts make a difference; you can always increase your contributions as your budget allows.
  • Utilize Free Online Resources: Take advantage of resources like the College Savings Calculator to estimate how much to save, the Loan Repayment Calculator to manage debt, and the Student Budget Calculator to plan for expenses.
  • Nurture Your Child’s Talents: If your child excels in sports, academics, or the arts, encourage them to develop their skills and pursue their passions. Participating in extracurricular activities and honing their talents can lead to potential scholarship opportunities, which can significantly offset college expenses.
  • Consistency Counts: As a parent, making small, regular contributions to your child’s college savings plan is more effective than making larger, occasional deposits. Set up automatic transfers and reminders to ensure you consistently contribute to your child’s education fund.
  • Talk to Your Child: Discuss their future goals, encourage them to seek summer jobs, and explore work-study opportunities once they are in school. Sharing financial responsibility fosters a sense of ownership.
  • Research to the Max: Get familiar with college costs early on. Sites like the College Board or your local university’s website can be good resources to get tuition and room and board estimates.
  • Financial Aid is Your Friend: Learn about scholarships, grants, and different need-based aid programs. The FAFSA (Free Application for Federal Student Aid) is a key starting point!



U + Me: Your College Savings Partner

UMe is proud to put students first. We offer specialized savings accounts designed specifically for education costs, which might have higher interest rates than traditional savings accounts for reaching savings goals.

Beyond basic banking, UMe also offers a scholarship opportunity every year, as well as a super helpful student banking resource page, and personalized advice for managing college costs! This guidance can be invaluable as you make important financial choices to help your child achieve a debt-free education.

A Coverdell Savings Account is also a great way to set aside money for college. It offers a wide range of benefits, including potential tax savings. Click below to learn more and see if this account is right for U!

Also check out this page especially for parents:


Build a College Fund Without the Stress

Financial planning for college can indeed be manageable — yes, U can do it! By understanding typical snags, taking proactive steps, and seeking expert guidance, you’ll put your family (and your future college student!) in a position of financial strength. We aim to help put your best financial foot forward because U matter to Me (to all of us) at UMe.

Disclaimer: U matter to Me (to all of us) at UMe — and that’s why we do our best to deliver helpful information on our blog. Please note the following: (1) UMe Credit Union works hard to make certain that the information we post here is as accurate as humanly possible. But as you know, information can change and evolve quickly. While we try to update the blog on a regular basis, the content of some older posts may not be correct or up-to-date. (2) Some destinations on the World Wide Web that we link you to will exist on external websites. UMe Credit Union does not officially endorse any connected sites, nor do/did we compensate or get compensated by any entities to be featured in our posts (unless otherwise noted). (3) Everyone’s situation is unique and we advise you to consult with our personal bankers or your finance, tax, or legal professional for advice individualized to you!