College Planning
One of the biggest financial challenges that a family will have to deal with before retirement is planning for college education. College can be very expensive and that is why parents play a very important role in this part of planning. Four years of college could cost more than $200,000 or higher.
Usually most young men and women start college in their late teens. That means that you should start planning for your young adult’s higher education even earlier. This is a process that is often overlooked and plays a very important role in a financial planning strategy.
College Savings Plans
If you wait until your child is in high school to start saving for college you are too late. You should start with your child college planning strategy when he/she is 3 years old or earlier.
A good strategy is to anticipate tuition costs. The price of higher education is going up in exponential every year. At the moment, the American Student Assistance program estimates more than $1 trillion dollars of outstanding student debt. Tuition fees have gone up more than 80% from 2006 to 2016 according to the US Department of higher education.
| TUITION | ROOM AND BOARD | TOTAL COSTS | % CHANGE |
Public two-year (in-state) | $3,435 | $8,003 | $11,438 | 2.2% |
Public four-year (in-state) | $9,410 | $10,138 | $19,548 | 3.2% |
Public four-year (out-of-state) | $23,893 | $10,138 | $34,031 | 3.2% |
Private non-profit four-year | $32,405 | $11,516 | $43,921 | 3.7% |
Source: Trends in College Pricing, College Board.
Parents should calculate their child’s total college expenses and evaluate financial aid provided by the federal department through FAFSA on the official Federal Financial Aid website. Also, evaluate different college planning resources like pre-paid college programs, monthly savings programs and other vehicles that could help during this process.
It is extremely important to start early, and develop a strategy according to your child’s higher education goals. Our college financial planning strategies can guide you through this process to help ensure you have sufficient funds available in the future. With the proper planning, paying for college should not be as intimidating at it seems.
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At this point we discuss the strategy most suitable for your needs. Now you are ready to take action on your financial plans and pursuit of your goals.
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