With tuition rates and fees going up every year, seeing your child graduate with their college degree may sometimes feel like an impossible dream. However, it doesn't have to be like this. In fact, if you start planning early on and explore various options, you may find that paying for your child's education may be easier than you expected. To make sure the money is there when it's time for your child to start college, here are a few savvy money moves for your consideration.

Whole Life Insurance Policy

Yes, if you have taken out a whole life insurance policy on yourself, you can actually use the cash value of the policy to help pay for your child's education. A very popular option with more and more parents, these policies build up a cash value over time, which can become quite substantial. If you want to access your policy's cash value, you can do so in three ways. First, you can take out a loan against the policy's value, then pay it back to restore the policy back to its original value. Second, you can take a withdrawal of cash value. Should you do this, you will not have to pay it back, but your policy's death benefit will be reduced. Finally, you can choose to surrender the policy altogether, which is not recommended unless you know the insurance coverage will no longer be needed. Also, remember that if you use this option, this income will not need to be reported on financial aid forms, making your child eligible for additional financial aid.

Education Tax Credits

If you paid out thousands of dollars for your child's tuition, fees, books, and other related expenses, you may be able to use education tax credits to recoup some of your money. One of the most popular has been the tuition and fees deduction, which lets parents deduct $4,000 from their gross income on their tax returns. To take advantage of this, you and your spouse will need to file as married filing jointly and earn less than $130,000 annually. However, if you earned between $130,000-$160,000 and filed jointly, a $2,000 deduction may be yours for the taking.  

Grants and Other Financial Aid

Between the U.S. Department of Education and assistance given to students by individual colleges and universities, you'll be happy to know that more than $120 billion in grants and other forms of financial aid is given to students each year. To get your piece of the pie, you and your would-be college student should sit down and fill out a Free Application for Federal Student Aid Form, commonly referred to as FAFSA. This should be done early on during your child's senior year in high school, since financial aid is usually first come, first serve. Should your child be awarded a federal Pell Grant, this can give them about $6,000 per year for their tuition, fees, books, and other materials. Also, many students are able to get work-study jobs on campus as part of their financial aid package, which lets them gain experience while earning money at the same time.

Focus on Scholarships

Surprisingly to many parents, college scholarships are not just awarded to students who make straight As or are star athletes. In fact, there are many scholarships that focus more on a student's creativity. For example, if you've got a child who likes to think outside the box, Duck Brand Duct Tape hands out a $10,000 prize each year to students who create prom outfits from duct tape. By doing a little research, you can find many other types of scholarships for almost anything.  

Have a 529 Plan

Once your child is born and you have some money you can afford to set aside for their education, starting a 529 Savings Plan is a very smart and effective way to have their college costs covered. Similar to retirement plans, the 529 Plan lets you use stocks, bonds, mutual funds, and money-market funds to accumulate money in your plan. Best of all, you won't be required to pay taxes on whatever money is earned through this account if the money is used only for college-related expenses. Available in all 50 states, the 529 Plan gives you the option to invest in a plan outside of your own state. However, be aware that your tax deduction is usually much better if you invest in your state's plan.

Parent PLUS Loan

If you are not averse to taking out a loan to pay for your child's college education, you might want to consider a Parent PLUS loan. Given out by the U.S. Department of Education, this type of loan has pros and cons.  On the positive side, it is not a need-based loan, you can borrow an amount up to the cost of your child's tuition, interest rates are fixed, and the loan's interest is tax-deductible. As for the cons, you will need to have an excellent credit score, the interest rates are high, and you must start repaying the loan only 60 days after you receive the funds. 

Rely on Other Family Members

In many cases, paying for a child's education involves many family members besides just parents. Between grandparents, aunts and uncles, and even close family friends, you may be surprised at just how willing others who love your child want to contribute to their education.  By joining forces and creating a "tuition team," you and your entire family can gain peace of mind and start making plans to attend your child's graduation ceremony in four years. 

Whether you go the standard route and use a 529 Plan or have your child qualify for large amounts of financial aid or instead team up with your extended family to raise the necessary funds, it will be well worth it when you see your child walk across a stage holding their college degree.

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