Education costs a pretty penny, but it’s well worth it. Whether you’ve got kids in preschool or high school, it’s time to check out the facts and learn how to meet rising college costs.
What Costs So Much
Almost half of millennials are worried about paying for their kids’ college education,¹ and for good reason….
● The costs of tuition, room, board, and fees have more than doubled over the last several decades.²
● The estimated costs of tuition, room, and board range from $15,022 to $39,173 a year depending on whether or not the institution is public, private for-profit, or private non-profit.²
● The average student loan debt has been around $30,000 for the last 5 years.³
● Student loan debt overall is over $1 trillion.⁴
Students also spend a great deal on books: text books can cost up to $300 each, and many classes require several books for the semester. On top of that, you’ve got to factor in travel costs for getting around the college town, going home for the holidays, extracurricular activities, and more.
Why It’s Worth It
That said, a college grad also accumulates over $800,000 more in his/her lifetime compared to someone who only graduated high school.⁵ $800,000! That’s a pretty good incentive to work through the current costs of college.
What does “working through the costs” look like? Here are a couple tips and starting points.
● If you’ve got a while before your kids start college, start saving! There are several options for a formal savings plan, like a 529 Plan or a Coverdell Savings Account.
● Look to grants and scholarships first because they don’t have to be paid back like a loan does. FinAid.org is a good resource for finding scholarships.
● If you resort to loans, your two main options are federal and private. Federal loans often have fixed interest rates and flexible repayment plans. Private loans are usually acquired through a bank and have variable interest rates (i.e. could increase over time), and they are not as flexible with repayment plans/hardships.
● No time to save? Are you taking a personal loan? Using equity or emergency savings? Discuss the options and know your consequences before taking action. For example, did you know that if you borrow from your 401(k), you could incur taxes and an early withdrawal penalty, and you risk setting yourself up for problems meeting expenses in retirement?
College Costs & College Savings
For an estimate of how much a particular college might cost, you can use online calculators, like CNN Money’s “How much will that college really cost?” Simply plug in the name of a college, and the calculator will estimate your total annual costs (before and after possible grants and scholarships). The next best step would be figuring out how much you need to save in order to meet the estimated costs.
How much should you be saving for college? The Financial Industry Regulatory Authority (FINRA) is a good place to start. FINRA has a “College Savings Calculator” that you can use to decipher how much you need to annually invest in order to reach your goals for college savings.
The facts say it all: college is expensive, and in many cases, it leaves both parents and graduates in debt. But it doesn’t have to be so challenging! Work with a Money Coach who is also a college planning and student loan specialist. Your Coach can answer your questions, help you make an action plan, and manage the costs of college, all while keeping other financial responsibilities in check. Call 888-724-2326 today.
¹Nesper, Mike. “The Voluntary Benefit that’s Addressing a Major Employee Concern.” ebn.benefitnews.com. EBN, 14 Oct. 2015. Web. 21 Oct. 2015.
²U.S. Department of Education, National Center for Education Statistics. (2015). Digest of Education Statistics, 2013 (NCES 2015-011), Chapter 3.
³The Institute for College Access & Success. Web. 13 May 2015.
⁴Chopra, Rohit. “Student Debt Swells, Federal Loans Now Top a Trillion.” consumerfinance.gov. CFPB, 17 Jul. 2013. Web. 6 Jan. 2014.
⁵Daly, Mary C. and Leila Bengali. “Is It Still Worth Going to College?” frbsf.org. San Francisco: Federal Reserve Bank of San Francisco, 5 May 2014. Web. 9 Nov. 2015.
College can be pretty intimidating when you consider the costs, academic requirements, and the motivation/work needed to graduate, but preparing for college can make it easier. From elementary school to high school graduation, there are steps parents and students can take to help them get ready for college and experience the benefits of higher education. […]
With a daughter ready to go off to college, Joshua wanted a better grasp of the financial responsibilities he would face. How could tuition, room and board, books, student loans and parent loans possibly fit into the family spending plan? Luckily, Joshua’s employer offered a financial wellness benefit that included one-on-one consultations with a College […]
The Employee Benefit Research Institute did a study of how much money people have saved for retirement based on their age.1 Whether you’re twenty, sixty, or somewhere in between, see how you compare to your peers with savings in an Individual Retirement Account (IRA). Take a look at the age ranges below and the average […]
Starting a family brings a whole new set of financial responsibilities, like visits to the pediatrician, saving for college, and don’t forget all those diapers and baby wipes. Such a huge change can make your wallet feel a bit thin. If you want some peace of mind about your new situation, check out how MSA […]