March 4, 2015 in Student Loans

The best way to catch up on college savings

Dear Dr. Don,

I’m extremely late saving for college for my children aged 12 and 15. What would be my best course of action?

To make matters more complicated, I don’t have much income.

Thanks,

— Jay Jump-Start

Dear Jay,

Better late than never, as they say.

With just a few years until your children are ready for college and with income constraints, there’s no magic bullet for a funding plan.

First, a college education financed by parents is not a right in our country, but it has become something of an expectation. You aren’t a bad parent just because funding might be a stretch for you at this point.

The good news is that financial aid can help finance some of their college costs. If you start a 529 college savings plan for the children, it shouldn’t greatly reduce their ability to receive financial aid. That’s the best place to start.

Start by looking at the 529 plan offered by your home state. Is there a state-specific tax break on the contributions? If not, then you can expand your search to other state plans.

You might be tempted to support your kids by taking out loans, such as the Plus loan or a home equity line of credit. Be very cautious about loans, as well as co-signing any private student loans. Direct Federal Student Loans don’t require a co-signer. Since you’ve struggled to put money aside for college over the past 15 years, adding loan payments could be financially catastrophic for you. Avoid the heartache and strain on your finances!

Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter.

Ask the adviser

To ask a question of Dr. Don, go to the “Ask the Experts” page and select one of these topics: “Financing a home,” “Saving & Investing” or “Money.” Read more Dr. Don columns for additional personal finance advice.

Bankrate’s content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate’s Terms of Use.

More On College Financing:

Create a news alert for "savings"