If you’re an expecting parent, a new parent, or have been a parent for some time now, you must be wondering, “Am I ready to pay for my child’s tuition cost?”
Unfortunately, the answer to this question may shock you. Tuition rates are rising across the board, and both new and experienced parents are struggling to find a way to foot the bill. Fortunately, things don’t have to be this way.
While the cost of higher education seems to be on a steady climb, there are ways to pull yourself out of the waters and keep you from getting in over your head. There are many ways in which you can combat the rising tide of tuition costs and prepare your child (and your wallet) for the price of college education.
Tuition Costs, The Problem at Hand
You may have seen the headlines by now. Tuition prices are going up, and they have been increasing steadily for a while. To some degree, a yearly increase in tuition is necessary to provide better supplies to students and staff and to adjust for the constant rise of inflation. That said, things have gotten too far out of hand.
According to the University of Massachusetts Boston Professor Ray Frankie, the rise in tuition doesn’t even compare to the inflation rate stating, “If you look at the long-term trend, college tuition has been rising almost six percent above the rate of inflation.”
This is a shocking fact, especially when you look at this data over an extended period. According to a number of studies, the average tuition at a four-year public university rose 110% between the years 1994 and 2014.
So what can we do? While challenging the constantly rising cost of higher education can seem daunting, there are still ways you can put your child through college without bankrupting yourself.
Playing it Safe
The traditional college education was four years at a public university, followed by the option of graduate school. This is no longer the new normal. Families without the funds or the savings have found ways around the steep tuition costs. Instead of admitting their children to a four-year college right away, they have opted for the cheaper alternative of starting half of those four years at a community college.
Community colleges are an excellent way to earn two years of higher education for a fraction of the costs. While community college is far from free, many programs are in place to help students pay for the tuition costs or even waive the cost entirely.
If your skeptical about just how much money a student can save by attending community college, the College Board offers valuable statistics. According to the data published for 2017-2018, the average community college costs $3,440 per year, while the average private college costs $32,330 per year. Pair this with the 6-year overall dropout rate of 31%, and you won’t feel stingy for playing it safe by enrolling in a community college- especially with the option to transfer later on.
Preparation Is Key
Is community college not the ideal experience for your child? If your child is still young, or if you are still thinking about having a child, you’re in luck. There is plenty of time to save up enough money to put a dent in their college tuition. The sooner you start putting aside money, the better. Furthermore, it is never too late to start. Even if your fund is initially small, every penny counts towards paying for your child’s higher education. If you can’t save enough, there are numerous financial plans out there that can help you.
For instance, you can open a 529 plan. A 529 plan is a tax-advantaged plan which can help you to save for your child’s higher education. Also referred to as a “qualified tuition plan”, these savings plans are sponsored by states and educational facilities. Here is how it works: Each month, you set aside money which will be collected after-tax. This money is invested and over time, it increases in value.
It is important to consider that there are different types of 529 plans and different ways that you can get started. Therefore, it is important to speak with a specialist, like a financial advisor, before getting started in order to ensure that you get the best plan for your personal situation.
The Value of a Higher Education
While college tuition rates have never been higher, the importance of having a college degree has never been greater. In the past, one could earn a stable living with just a high-school diploma and minimal college education. Today, the standard worker has a bachelor’s degree of some kind, and too often, those without a college degree are left to pick up whatever work is left. Paying for college tuition costs may seem like a difficult task at times, but no challenge is too great when it comes to your child’s future.
Interested in learning more about planning for your child’s education? Reach out today and we will help you get started!
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