Paying for college tuition has become even more expensive over the years. This has made the pursuit of higher education even more exclusive to families who are financially blessed.
As a middle-class parent, the idea of spending nearly 38,000 dollars a year to send your child to college can seem impossible. With the continual rise in the cost of education starting to plan ahead to save up for your child’s college expenses is very important.
Rising Cost of Education
Over the course of the past decade, the cost of education at four-year institutions and community colleges has grown exponentially. U.S. News reports that the cost of in-state tuition has grown nationally by 72% from 2008 to 2021.
This spike is not consistent with the gradual trend of inflation and has become a barrier in many’s pursuits of higher education. Private schools have experienced a much slower rise in the cost of education. Private schools have continued to remain a more expensive educational path than public schools.
Although the greatest financial burden for college is the cost of tuition many other costs add to the overall expense of education. Students also need to pay for books are often required to pay fees per credit hour to the university.
Although the average cost of tuition been on the rise the primary reason for the ascending cost of college is university fees. School-related fees are tacked onto tuition expenses to fund academic and nonacademic pursuits on campus.
Besides application fees and tuition, students are charged for the traditional parts of the college experience. Colleges begin this journey of fees with student orientation fees. Students are charged for mandatory school orientation to help select their classes and acclimate to campus.
Some schools charge students with fees to support extracurricular aspects of student life. Mandatory fees are charged per credit hour to sustain and fund student life on campus. These fees fund non-essential aspects of campus like student organizations, gyms, and student centers.
Schools charge many other blanket fees to students that you can’t opt-out of. For example, many students charge students a hefty per-credit-hour transportation fee. This fee finances “free” public transport for students around campus. You are not exempt from this fee if you drive yourself or bike to classes.
Cost of Living
In addition to the purely academic expenses, the cost of living outside of the home can be another financial barrier for families. By the time parents put aside money for housing and food the cost of education has become astronomical.
Apartment companies and rental properties are also able to radically increase the costs of living near college campuses. Many students value a quick commute to campus. This has quickly normalized housing companies’ high expense bubble of properties around a college campus.
Methods to Save for Your Child’s College Tuition
In order to save for your child’s education, you want to start by making a four-year plan. Look into potential expenses over the duration of their college career. By finance mapping, you can build a strong financial plan to offer as much assistance as possible.
Put forethought into how to finance your child’s college education. This can help alleviate the potential weight of student loans.
To best navigate the financial requirements of a college it is important to start saving early. Here are some long-term ways to help finance your child’s academic future with minimal financial strain in the long run.
College Saving Accounts
Due to the nationwide need for tools to help with saving for college, there are many private and public programs designed to help families put away. Many savings accounts come with incentives that help to finance the cost of education. Here are some of the most widely used savings methods for higher education.
Many are familiar with a Roth IRA, a tool to save for their retirement. However, similar to this guaranteed plan for retirement you can invest in an education IRA. An education IRA is a tax-advantaged investment account for higher education. This is also known as an educational savings account (ESA).
This savings modern allows parents to make non-tax-deductible financial contributions. This money goes into an individual retirement account for their children under the age of 18.
An Education IRA is flexible as it can be used to finance different types of qualified education, such as private K-12 schooling, as well as college. The Educational IRA must be given to the child if not used for educational purposes. This means if a child opts to not attend college the money would be distributed to them as contributions have been made in their name.
ESAs max annual contribution per beneficiary at $2,000 dollars. This can be a limiting factor if this is your sole source of saving for your child’s education. Another limitation of Education IRAs is that an account can only be opened for a beneficiary under the age of 18 and must be used by the age of 30.
Many parents have started a 529 plan to support their child’s academic career. This plan is sponsored by state governments to encourage families to save for future educational costs. The 529 plan, or qualified tuition plan, allows you to save money for your child’s secondary education tax-free.
Some states even allow you to deduct your annual financial contributions from your income taxes. A benefit to the 529 plan is that you can open a plan in any state, whether you are a resident of that state or not.
529 plans allow for parents to save money through small incremental contributions at any point in time. This is a preferred method of saving if you are planning on making a series of contributions throughout the year.
Take Out a Loan
Loans are sometimes unavoidable when financing a student’s college education. The average student loan debt for the Class of 2018 was $29,000. Much like the cost of college, the average student loan debt is also on the rise.
When looking into different loan options for financing your child’s education, consider the following options.
Home Equity Loans
A home equity loan can be an inexpensive way to finance major expenses such as college. This allows you to lean on the value of your home as you liquidate assets.
Home equity loans allow you to access the portion of your home’s value that is already paid off. Through making steady payments on your mortgage over the years you can develop this equity. A home equity loan can help you pay for college while saving money on interest.
Green loans are unsecured loans that can be used to fund the purchase of energy-efficient products. In order to slowly increase the accessible equity on your home, you can file for these unsecured loans. By completing home improvement projects that will increase the value of your home.
Boost Your Child’s Potential for Earnings
Putting money aside to pay for college is a secure way to ensure that college is financially attainable.
The amount each student pays for college varies on what the school offered in financial aid and acquisition of scholarships. Encouraging your student to excel academically and in extracurriculars, can boost their academic learning potential.
College’s Financial Aid Programs
College financial aid programs help to pay for undergraduate and graduate education. Through the distribution of grand, work-study programs, and scholarships financial aid programs help to make college more affordable.
Institutions base their financial aid on a variety of factors. Some schools offer need-based financial aid where they solely look at the income bracket of the student’s family. Others distribute scholarships based on anticipated academic success based on a student’s application.
Apply to Scholarships
When your child is in high school get into contact with their school’s guidance counselor, to help you find a list of local community scholarships.
Different community organizations raise money every year for scholarships. By encouraging your child to apply for these scholarships they can collect free money to put towards college expenses.
Encourage your child to apply for scholarships specific to the schools and field they want to study. There are millions of dollars given out annually in scholarship money. It’s important that your child feels motivated to apply for these financial opportunities.
Take AP and IB Classes
Advanced Placement and International Baccalaureate classes are offered at many high schools. These programs offer college credit for students who excel in their rigorous curriculum.
AP and IB classes lower the number of classes you need to take in college, they also make your application more competitive for acceptance.
Create a Well Rounded Application
Schools are looking to invest in students who they believe will excel academically and professionally in the future. Admissions officers believe that success outside of the classroom is an indicator of skills that lead to future achievement.
Schools and scholarship organizations are more likely to invest in students who have exhibited success in their academics and extracurriculars.
Start Saving for College Tuition Early
It can be daunting to think about the looming expenses of college tuition, fees, and housing. With a well-thought-out plan saving for college is very doable.
With the price of college on the rise, it is best to invest in education savings plans as soon as possible. This gives your savings time to grow and reduces the amount of financial strain as your child’s college career approaches. Take the next steps and start investing in your child’s future today.
Connect with us for more advice on how to navigate the many challenges of parenthood.