Want Your Kids to go to College? What Should You Really Expect?
It’s no secret to any parent with aspirations of sending their children to college that the cost of doing so is quickly inching beyond the reach of even the most affluent families. According to the College Board, which surveys college pricing annually, the average cost for an in-state public college in 2013-2104 is $22, 826, and $44,750 for a private college. However, as the recent announcement by the University Of California Board Of Regents to increase tuition costs by 5 percent per year for the next five years indicates, college costs continue to increase at a much faster rate than the rate of inflation.
For the parents of a new born today, the average total cost of a college education at a private education could be as high as $130,428 per year at the current pace of college cost increases. Even a state college will run more than $41,000 a year. That’s an astronomical number for the average American family; however, when you consider all of the costs involved in a college education, it’s easy to see how it adds up:
- Tuition and Fees: $30,094 annually for private colleges; $8,893 for public colleges; $22,203 for out-of-state residents attending public colleges.
- Room and Board: $9,500 per year for on-campus housing and meals at public schools; $10,830 for private schools
- Books and Supplies: $1,207 at public colleges; $1,253 at private colleges
- Personal and Transportation Expenses: $2,580 at public schools; $3,228 at private schools
What are Parents to do?
To state the obvious, parents who are serious about securing a quality college education for their children must plan well ahead and start saving as early as possible. However, with college costs increasing at such a torrid pace, parents must not lose sight of other important priorities, such as their retirement. Planning for college expenses must be done in the context of an overall financial plan with the understanding that available resources must be directed towards the very top priorities first. The reality for many families is that they may never be able to save enough to fund a college education. So where will the funding come from?
Nearly 60 percent of today’s college students are eligible for financial aid. With proper college education savings planning, even affluent families can qualify for financial aid available through federal grants and from the colleges themselves. Determining financial aid eligibility can be somewhat complicated; however, the general formula considers the assets and income of the child foremost, and then, based on the parent’s financial circumstances, they will determine a “family contribution” portion of aid. Big tip: Start your financial aid planning early – no later than your child’s freshman year in high school.
It’s a myth that only the very brightest or most athletic kids can get scholarships. In fact, scholarships in all forms and sizes are widely available. Although many are “small” - $500 to $2,000 – they can add up if you know where to find them Check with your school counselor and community leaders to learn more about how to find scholarships.
The increase in availability of school loans is a double edged sword for students and their families. Nearly 70 percent of college students graduate with student loan debt. Consequently, student loan defaults are on the rise. Borrowing for college expenses should be a last resort, but, if it’s done right, in the context of a well conceived financial plan, it doesn’t have to create an insurmountable financial burden. Big tip: Steer your student towards fields of study with good prospects for jobs and income. Liberal arts major probably won’t cut it anymore.
Yes, even college administrators will negotiate price, especially if your child is a great student. They want to pull in a higher number of kids with a solid academic record, and if scholarships aren’t available, they will consider lowering their price.
Source: The College Board Annual Survey of College Costs