Saving for College
College is expensive. We just stumbled on a report from the The Chronicle of Higher Education, which says there are now are 100 colleges which cost more than $50,000 per year!
In an economy when foreclosures are high and money is low, how can students and parents save for college?
Save Early, Save Often
Virtually every state now offers a 529 plan, allowing parents a tax-free or tax-deferred plan to save for their child’s higher education. The plans offer parents tax-based incentives to save early and save often for their children’s college tuition and expenses. 529 plans can be set up at your local financial institution.
The key is to get started early and contribute often. It’s become quite common for parents to start a college savings plan when a child is born (16 years of savings growth!), or when they graduate into high school (still 4 years of savings growth!)
Tip: Consider asking friends and family members to give donations to the child’s college fund at birthdays, holidays, and Christmas.
Find the Right Schools…
Is your child thinking of going to Berkeley? You’d better know that the average cost for new admissions in 2010 is over $49’000 for non-residents. If that price just gave you some sticker shock, you need to consider looking at what colleges your child can afford, and narrowing down your list of admission-worthy colleges from there.
Rather than commit yourself to a particular college “brand”, consider what program your student is interested in going into, and then find the best schools in that field. Your goal isn’t to find the best all-round college; it’s to find the best college for your kid.
If money is tight, seriously consider in-state colleges, where tuition is typically half of out-of-state schools, and local colleges where your student may be able to live at home free. While finishing his/her undergrad, your student may then be able to save for a 1-2 year post-graduate program at a higher-end school.
… and the Right Scholarships
In the A2Z College Planning Guide “Time Management for College-Bound Students” we talk about how students should carefully choose extra curricular activities, to not only match their skills and interest, but also give them opportunities for scholarships and grants.
Each college has its own criteria for scholarships, based on a need for diversity and excellence in particular programs. Students are often automatically enrolled in college-specific scholarships and grants, but have to apply separately for private and state-based scholarships and grants.
Uncovering scholarship and grant opportunities can be a full-time job. If you’re serious about sending your high school student to a top college, it’s worth the time and