In fact, only 40% of students graduate in four (4) years. That means that 60% of students are taking five (5) years to complete their education.
It’s very important to plan for this major expense well in advance. On average, it costs over $6,000 per year to attend a state college. And if you attend an out-of-state college full time, there is a sur-charge of over $10,000. Private colleges can run well over $22,000 per year.
There are actually several ways to pay for your education or provide financing your child’s education:
* You can invest your money in the stock market or savings account. However, this can result in hefty tax payments.
* You can hope your child has the ability to obtain a full scholarship.
* You can take a second job when the time comes…or have the student take a part time job to help with expenses. But consider the longer time frame to graduate…and also the fact that there is a higher drop-out rate with students who have to work.
* Or you could have your child finance his/her education with student loans. But, this leaves them with a huge debt load when they are trying to start their new adult life.
Let’s consider a a couple of different ways to save up for those education expenses!
Let me explain how to have the money for college at your fingertips when you need it. Just purchase a rental property with a 15-year mortgage? I’ll use a $125,000 property for our example:
Equity will build! Even if there is no appreciation in value, you will still have this $125,000 property paid for in 15 years. Plenty for the finances needed for college.
But let’s run some figures on a modest 5% increase per year in property values. In this case, your property will more than double in 15 years. Your $125,000 investment could be worth over $250,000 when you’re ready to pay for college.
And you don’t even have to sell it! Here’s a way to take your money out of this property without paying tax on it. Simply re-finance it. A re-finance is not taxable income!!
What a great way to plan for college! You will have had renters to pay the mortgage payment…and if you re-finance for college expenses, you will still have renters to pay for the new mortgage payment.
Even with refinancing for a higher amount – consider that because the property has increased in value – so has the potential rental income!