Planning for College
Planning for your Family's College Education
With college costs increasing at twice the rate of inflation each year, most American families now intentionally view a college savings plan as a fiscal necessity, not an option. Today's low cost 4-year college will be $60,000 or more, and a private school education will be $160,000. If you compound today's price by the 8% that tuition has increased annually the last 25 years, by 2023 your 1st grader will be paying $100,000 per year (The college Board, Trends 2010).
The Future holds more of College Graduates
A college education is still worth every penny . . studies show that college graduates make, on average, about a million dollars more over a lifetime than someone with only a high school education. And there is more good news: very few students will pay the full sticker price of their education. More than $15 billion in financial aid is offered each year from federal and state governments, private organizations, and institutions themselves. More than 60% of students attending four-year public college and 70% of those at private schools are getting some sort of financial aid.
How can you qualify for this money?
The first step is to find out how much your family is expected to contribute to the overall cost of education by filling out the Free Application for Federal Student Aid (FASFA). It is a process to fill out and you will need a number of personal financial documents to complete, but the effort is necessary because the FASFA is used to apply for federal and state loans and grants. FASFA can
be filled out online (www.Fafsa.Ed.Gov) and it is also what schools will use to offer aid packages that consist of grants, loans and work-study. Many worry that they won't be able to pay of their children's college education without getting mired in debt, but the key to avoiding that scenario is planning. Be willing to put in the time to research the many education savings plans, grants, scholarships and loans available. (see www.savingforcollege.com)
What are the best options to save for college education?
529 Plans – Many believe the 529 college savings plan to be one of the best ways to save for college costs. Named for the part of the federal tax code created in 1996, it allowed a parent to open a tax-deferred savings plan and any withdrawals are completely tax-free is used to pay of a beneficiary's college tuition, fees, books, supplies, and room & board (if the student is enrolled at
least half time). The best use of these plans is when they are started when a child is young providing many years of savings growth and compounded interest. See my email below to request “The top 10 things everyone should know about 529 Plans”.
Florida Prepaid College Plan - www.MyFloridaPrePaid.com
The Florida prepaid plan allows you to make a monthly payment or lump sum toward future tuition and room & board college costs at today's rates to cover future costs. You can visit the website above to enter your child's age and the plan you want to prepay to calculate the monthly or lump sum amount for your family. The advantage of this plan is that as long as you make all the payments, the tuition will be covered regardless of future costs. This plan applies to state and local colleges only.
Next to retirement, college planning is one of the most serious aspects of financial planning, because it influences a young adult's total lifetime earnings. There are numerous other creative ways to plan for, pay for, and create great cost savings as you prepare and complete a college education. Please email me to request the informative publication below.
The top 10 things everyone should know about 529 Plan