15 Creative Ways to Save & Pay for Your Kids’ College Education

To say that college costs have skyrocketed is an understatement. After adjusting for inflation, CNBC notes that average tuition for private colleges rose from $15,160 in 1988 to $34,740 in 2019. Both of those figures are in today’s dollars, marking a 129% increase. For public universities, average tuition rose from $3,190 to $9,970 over the last 30 years, a 213% increase in inflation-adjusted cost.

Those numbers are a bitter pill for parents, especially when many 18-year-olds are not mature enough for college. Some flunk out; others drift their way through four or five years of a parent-paid paradise, then graduate without the first clue what they want to do with their lives. Parents should think long and hard about whether to pay for their child’s college education.

If, after some soul-searching – and perhaps wallet-searching – you decide you do want to help with your kids’ college expenses, the next question you face is, “How the heck will I pay for it?”

Here are 15 creative ways to pay for your kids’ college education, many of which you can combine for maximum effect. education, money, investing, home decor, business, personal finance, college,education, money, investing, home decor, business, personal finance, college,education, money, investing, home, business, personal finance, college,education, money, investing, home decor, business, personal finance, 

1. Create a Bond Ladder

Bond Ladder Business Concept Investing Chart Growth

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While bond ladders sound complex, they’re actually quite simple.

When you buy a bond, you lend money interest-only for a certain number of months or years. Upon maturity, you get your initial investment back. So, if you invest $10,000 in 5%-interest bonds for 10 years, you get $500 each year for 10 years, and at the end of 10 years, you get your original $10,000 back.

The idea behind a bond ladder is that you buy a series of bonds scheduled to mature one after the other. That way, you receive a series of large payments on a schedule that meets your needs. For example, you could buy one set of bonds that mature just before your child’s freshman year, another set that matures before their sophomore year, and so on.

Bond ladders are often used for retirement planning, as a low-risk investment to cover the first few years of retirement and mitigate sequence of returns risk. But nothing says you can’t use them for college tuition instead. education, money, investing, home decor, business, personal finance, college,education, money, investing, home decor, business, personal finance, college,education, money, investing, home, business, personal finance, college,education, money, investing, home decor, business, personal finance, 

2. Buy Rental Properties

House For Rent Property Sign

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Rental properties can help cover your child’s college tuition costs in several ways, the most obvious being income. Rental properties are income-generating investments, and that income can put a dent in tuition bills or even cover them entirely.

But real estate also tends to appreciate over time, even as the mortgage balance dwindles. Imagine you buy a rental property for $100,000 when your child is 8 years old, and you borrow an $80,000 mortgage. Ten years later when your son or daughter is ready to enroll in college, your mortgage balance may be only $55,000, but the property may have appreciated to $160,000. That leaves you with $105,000 in equity. You can sell the property to realize that equity and pay for your kid’s college costs, or you can refinance the property to pull that equity out in cash. education, money, investing, home decor, business, personal finance, college,education, money, investing, home decor, business, personal finance, college,education, money, investing, home, business, personal finance, college,education, money, investing, home decor, business, personal finance, 

Just remember that rental properties are not completely passive investments like equities or bonds. They require some education and work to buy, and they require ongoing labor to manage. Before deciding to buy a property, read up on some of the pros and cons of owning and managing rental properties. If you are thinking about purchasing a rental property, a great place to start is Roofstock.

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