A college education continues to be one of the most meaningful investments you can make, whether it is for the future of your child, grandchild or yourself.
College enriches the lives of students, exposing them to new ideas, broader thinking, cultural awareness, and the potential to earn more in life. A college degree is a symbol of all the hard work that went into getting to the moment of walking across the graduation stage.
While the benefits of a college education are vast, the costs of tuition and other associated expenses make planning ahead a necessity. If you are preparing to save for college, there are several items to address, including:
These items are crucial to consider with college costs on the rise. Below are the average estimated full-time undergraduate budgets (including tuition and fees, room and board, books and supplies, transportation and other expenses) for 2018-2019 at four different types of institutions:
|Public Two-Year In-District Commuter||$17,930|
|Public Four-Year In-State On-Campus||$25,890|
|Public Four-Year Out-of-State On-Campus||$41,950|
|Private Nonprofit Four-Year On-Campus||$52,500|
Source: College Board. (2018, October 19). Annual Trends in College Pricing and Student Aid Reports.
Having a sound college funding strategy is critical to being able to realistically plan for and afford a college education. There are essentially three main routes to support the cost of a college education:
While grants and scholarships are an incredibly helpful source of funding, depending on either option can be unreliable. Grants are needs-based funding vehicles that can be unpredictable and exclude many middle-income families. Scholarships can be provided on both a needs and merit basis, yet it can be difficult to predict whether or not the college-bound individual will be eligible for future offerings.
Loan programs are offered by banks, civic organizations, colleges, and federal and state governments. While loans are a valuable option that provide millions with the opportunity to attend college, they also come at a significant cost. The loan offered is limited by the family or student’s ability to repay and often saddle the student with a long-term financial burden. The average graduating senior in 2018 will owe $29,200 in student loan debt.2
Family resources can include personal savings or investments by the student, parents or other family members. The best strategy to pay for college involves getting started as soon as possible. There are several college savings plan options that are available to choose from, with the appropriate options for you depending upon your specific financial situation and goals. Some of the most common options include 529 plans, Coverdell ESAs (Education Savings Accounts), UGMA/UTGA (Uniform Gift to Minors Act or Uniform Transfer to Minors Act) accounts, Traditional or Roth IRAs, and more.
College funding options are complex topics that can be confusing to sift through on your own. A financial advisor can help walk you through your options and help keep you on track financially through college graduation.
1College Board. (2018, October 19). Annual Trends in College Pricing and Student Aid Reports.
2The Institute of College Access & Success. (2019, September). Student Debt and the Class of 2018.