college savings require same dedication as Olympics

College Savings goals require same dedication as parents of Olympic athletes

If you think education is expensive, try ignorance.-- Ben Franklin

The Olympic games always make me think of that fabled American Dream, to achieve more than the generation before you and to shape the world so it will weigh lighter on your children’s generation than it did on yours. The glory that accompanies Olympic competition is a perfect example of this dream realized.

I listen in awe at the stories of parents who work two or three jobs, drive for countless hours and sometimes endure separation from their children ú all to make the dream come true. Such sacrifice is admirable and surely worth the personal strain when all is said and done.

But there is no need for you to look at the financing of your child’s education as an obstacle worthy of Olympic-sized sacrifice. By starting early and saving persistently, your children will reap the benefits you have sown, and both ends of the American Dream can be realized.

The first thing you must commit to do is regularly set aside money for college. Most students pay for higher education through a mix of savings and financial aid, which may include scholarships, grants and loans. Try to set a specific dollar amount that you will put away each month for little Jimmy or Suzie’s educational goals. Keep this money in a savings account designated only for educational purposes. Stick to your plan by setting up a direct deposit into this account each month.

Furthermore, increase the amount you save each year. Make a habit of earmarking yearly bonuses, tax refunds and other windfalls for this account, and that expensive dinner you might otherwise treat yourself to won’t even be missed. With the rise of college costs being about twice that of inflation, it’s a must to plan and save accordingly.

Once you’ve started saving in this very conventional way, you can start looking at some investment strategies to increase what you accumulate. Just how risky you want to be, however, determines how much time remains before you see them in their high school cap and gown.

The Motley Fool, an investing web site, suggests these guidelines according to the age of your future collegian:

* Birth to School Age: 100% growth stocks. You have more time, so you can take more risk.

Age 6 to 13: You might want to think about making a few more "prudent" selections. 70% stocks, 30% bonds.

Age 14-18: You want things to continue to grow, but you also want to protect yourself from market volatility. Consider 30% bonds, 20% stocks, and 50% money market funds.

College Age: Once junior is fully into calling you at the drop of a hat to beg for money, you want to be able to get to it fast. Consider putting the vast majority of it into a safe, interest-bearing account like a money market fund.

College Savings require a different approach if you’re starting late in the process

There are a few more important questions to consider if you’re getting a relatively late start on this savings business

Make sure your child wants to go to college and is ready for the long-term commitment. Over 30% of college students leave for at least one semester before the end of their sophomore year. And once he or she is not taking classes, any loans he was lucky enough to receive will need to be paid back immediately.

Take a closer look at the cheaper schools. A college degree is an investment, and only you and your children can decide if it’s going to be worth the extra six years it will take to pay off a private school education? But the burden of debt after school is a compelling reason to choose a public university.

Reduce your income as much as possible. If you have losses from a business venture gone wrong, now is the time to take them. Don't sell any securities for a profit in the year before you are applying for aid. Reducing your income will help your eligibility for more financial aid.

Have your child classified as "independent." The good news is that your child will be judged on his own savings and income when the school assesses need for financial aid. The bad news is that you won't be able to claim him as a dependent for tax purposes any more, and he'll have to fend for himself for a year before the benefits of this strategy kick in.

Look for unorthodox sources of scholarships. Millions of dollars in scholarships are given away each year to deserving students. But there is millions more out there that no one is applying for. An Internet search can bring up some very interesting and easy-to-qualify for programs.

Of course, if your child turns out to be a Michael Johnson or Marion Jones, you probably won’t have to worry about all this: Their Olympic sponsorships would cover the college education for a small town. But even if junior doesn’t make it to the Olympics, remember that the American Dream is still possible, with a little planning and a little help from your friends.

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College Savings Tip
The first thing you must commit to do is regularly set aside money for college. Most students pay for higher education through a mix of savings and financial aid, which may include scholarships, grants and loans.