As a parent, you desire to help your children in every possible way. But the high cost of college tuition makes it difficult for retirees to sponsor their children’s education. When you started retirement planning, you may not have considered the possibility that your kids would need your help. Luckily, there are ways to help your kids with college tuition as a retired parent.
Set up a College Savings Plan
A college savings plan will help you anticipate your child’s college needs and make early provisions even before they gain college admission. A 529 plan, also called a qualified tuition plan, is one popular way that encourages you to save for your child’s future college costs.
529 plans are tax-free and allow you to regularly save significant amounts of money for your kid’s college needs. You can easily withdraw the money when it’s time to pay for college expenses like tuition, textbooks, and accommodation. 529 plans come in different types, and the benefits and rules attached to each type vary by state. So, try to read up on your state’s offer and how the savings add up over time before choosing a plan.
Consider taking a Loan
Though you’re retired, you can help your child with college tuition by taking out a loan. One loan option is a federal loan, and your child must fill out a FAFSA (Free Application for Federal Student Aid) form to get this loan. This form determines your child’s eligibility for federal college loans and other types of government aid. If your child is a minor, you’ll be responsible for filling out a part of the FAFSA form, and you’ll need to provide your financial information.
Completing the FAFSA form and submitting it through the Federal Student Aid website will open you to the possibility of a Parent PLUS loan. Parent PLUS loans are federal loans available to parents or legal guardians of college students. The application requires that you consent to a credit check. So, you should have a satisfactory credit score to qualify for this loan.
Alternatively, you can opt for private loans to pay for your child’s college tuition. When you apply, a lender will typically ask for your financial documents like gross annual income, Social Security number, latest tax return, and a list of your assets. Unlike private loans, Parent Plus loans have more flexible repayment options that allow you to pay less monthly. But this can extend your loan term.
Apply for Grants
Grants are an excellent way to fund college expenses as they don’t require repayment. There are several grant options for your kid, including those from the federal and state governments. To apply, your child should complete a FAFSA (Free Application for Federal Student Aid) form. The information they provide on the form will be used to calculate their EFC (Expected Family Contribution). An EFC is the amount of financial support for college your child is presumed to get from family.
Your child can qualify for a Federal Pell Grant, awarded to college students based on financial need. The FAFSA determines the financial need, and this grant is usually awarded to college students with the lowest EFCs. If granted, your child must fill out a new FAFSA form at the beginning of each calendar year.
An Academic Competitiveness Grant (ACG) is another federal grant option for your child. It is awarded based on need and merit to first-year college students and sophomores. Your kid should have a high GPA to qualify for this grant. They can also apply for the Federal Supplemental Education Opportunity Grants (FSEOG) that help low-income college students. Alternatively, your child can apply for a TEACH grant if they agree to spend four years teaching at a secondary or elementary school that serves underprivileged kids. You can also encourage your kid to research grants from their school or consider state grants.
Consider a Reverse Mortgage
Reverse mortgage loans allow homeowners 62 years and older to borrow against their home equity and receive money from a lender. Retired parents can leverage this funding option to pay for their kids’ tuition. You can access lump sums in this loan plan or receive the funds in bits every month. You don’t have to repay reverse mortgage loans, provided you continue living in the home. However, the loan must be repaid (usually by reselling the house) if you die or move out. You can use a reverse mortgage calculator to determine how much you’d qualify for: https://reverse.mortgage/calculator.
Create a GoFundMe Page
You can create a GoFundMe Page to raise your kid’s college tuition. GoFundMe is a crowdfunding platform that allows you to raise money from family, friends, and even strangers. The money you raise through GoFundMe isn’t a loan. So, you won’t need to worry about repayment.
To encourage people to support, let your child share what they aspire to do after college and how they intend to give back to the community. For instance, they can pledge to tutor underprivileged kids for free.