10 ways to help your children avoid being swallowed by college and housing costs‍

Buying a home or attending college these days brings sticker shock.

According to U.S. News & World Report, the average college tuition and fees reached $42,162 per year at private universities, $23,630 at public out-of-state universities, and $10,662 at public, in-state universities. As for homes, those prices are out of control, too. The median home price in the U.S. in 2023 is $422,550, on top of surging mortgage rates.

These statistics can be incredibly daunting for children who have yet to enter college or purchase a home. Ensuring your children are not swallowed by college and housing costs requires strategic planning and financial awareness.

Here are ten steps you can take to help mitigate these expenses for your children:‍

‍1) Start Saving Early

Open a college savings account, such as a 529 plan or a Coverdell Education Savings Account (Coverdell ESA), immediately after your child is born. These options offer tax-free investment growth and tax-free withdrawals when the funds are spent on qualified education expenses. Additionally, the payouts from these plans can go toward both room and board.‍

‍

2) Encourage Scholarships and Grants‍

Encourage your child to apply for every scholarship and grant, no matter how small. Every dollar will add up.‍

‍

3) Promote Community College or Trade Schools

Encourage your children to attend a community college until you know they are serious and pick a career path where they can likely afford to take on debt. Another way is to promote the various trades as respectable and desirable options. As both options can provide quality education at a fraction of the cost of a four-year institution, your children can eliminate some debt while learning and earn a decent salary—a financial win.

‍‍

4) Encourage Advanced Placement (AP) and College Credit Classes

High school students can take AP classes or enroll in dual credit courses. This can help them earn college credits before they even graduate high school, reducing the number of credits they need in college and future tuition costs.

‍

5) Live Off-Campus or at Home

If feasible, encourage your children to continue to live with you at home during college to save on housing costs. Or, have your child look at off-campus housing, which can significantly reduce expenses.

‍‍

6) Encourage Part-Time Work

Encourage your child to work part-time during college to help cover living expenses or contribute to tuition.

‍‍

7) Consider Co-op Programs or Work-Study

Look into cooperative education programs where students work in their field of study while attending school. Work-study programs also provide opportunities to earn money while studying.

‍

8) Budgeting and Financial Literacy

Teach your children about budgeting and financial literacy from a young age. Actively teach your children about stock investments and how to contribute and track them. Or start a 401(k) for your child at a young age. Understanding the value of money and how to manage it will be beneficial when they face college and housing expenses.

‍

9) Consider Buying a Multifamily Property

Consider buying a 3–to 4-unit multifamily property in a university town and rent out the remaining units. The other units may likely cover your child’s rent and utilities—and you’ll earn equity. Plus, Fannie Mae just started accepting 5% down payments for owner-occupied 2-, 3- and 4-unit homes, which is a marked departure from the previous requirements of 15-25% down payments.

‍

10) Co-buy a home

For many segments of the population, homeownership is as elusive as ever. Why not consider co-buying a home with your child to build wealth? Pooling your money and building community and equity together make home ownership much more attainable.

‍

By combining multiple strategies and starting early, you can help your children manage college and housing costs more effectively and reduce the financial burden on them in the future.

Nestment, Inc. does not guarantee and is in no way responsible for the accuracy of the information provided in this blog post. All information is provided “AS IS” and with all faults. Data presented here may not reflect all real estate activity in the market.  While the information on this site is about legal and tax issues, it is not intended as legal or tax advice or as a substitute for the particularized advice of your own attorney and tax professional.