Setting a College Plan in Place for the Future

One of the most rewarding parts of our job is helping clients plan for and send their children to college.  Over the years we have seen many families, including our own, set goals for education funding and share the happiness of watching students graduate without crushing student loan debt.  If you have young children or grandchildren today, it is critical to start early with a plan for paying for their higher education.  College costs have gone up 63% since 2006.  According to the College Board, the average cost of tuition and fees was $10,440 for in-state public students but a whopping $36,880 at private colleges. However, the budget can skyrocket if they are considering Ivy League colleges where tuition alone may exceed $50,000-$60,000 per year.  For families with multiple children, these numbers can be overwhelming.

We can help get the genie back in the bottle.

Our college planning breaks this down into steps.  Step one is to determine what your goals are for college education: the type of school (public vs private), the number of years (2,4, 6, or 8), and the percent that you wish to cover.  From this, we can project what your future need will be in dollars, and how much you need to save for this.

Step two is to determine the most appropriate strategy for funding your educational goals. We most commonly recommend clients utilize 529 accounts for education savings. Depending on your state of residence, these accounts can provide an additional tax benefit. However, 529 plans are not right for every situation. We will formulate a plan that works best for you.

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Step three is to track your progress along the way and make adjustments if necessary.  Are you saving enough?  Is the asset allocation appropriate given the age of your child?  We can provide on-going guidance on this.

Step four is talking to your children as they get older (high school freshmen) to set expectations and discuss their interests.  If they have the opportunity to take Advanced Placement courses in high school, they may be able to graduate early.  If you have decided that they must pay for a portion of the expenses (10%, 25%, or more), now is the time to discuss this.  If they are going to be responsible for repaying student loans, then they should understand their obligation.

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Step five is making any final adjustments to the plan. When considering school choices, be sure to look at the net price after any scholarships and grants which often varies substantially from their published prices.  If you have not saved enough to cover your goal, we can explore other options.  The selection of the school is obviously of utmost importance.  The most expensive schools are in the East with in-state Rhode Island, Vermont, Massachusetts, Washington DC, and Pennsylvania leading the pack.  By contrast, there are some very affordable schools in the South and West: Wyoming, New Mexico, North Dakota, Montana, and Arizona are surprisingly cheap. Living at home while attending school will reduce room and board costs.  Another possibility is attending a 2-year community college and transferring for the final 2 years.  We can help you evaluate your options and select one that is right for you.

College planning is manageable when you have a CFP® professional to help you.