Student debt has topped 1 trillion dollars and many parents today worry about how they (and/or their kids) will pay for their college education. It’s an opportunity and advantage we want to give our kids, but the rising costs make it feel out of reach for many. Like most things we want, we need to create a plan and it starts by educating ourselves, so we can make smart decisions around college.
With the increasing costs, we need to be extra mindful to help stretch our college savings. We need to consider all options, including whether college is the best fit for your child. Many parents automatically plan to send their children to a four-year university, but it is not always what they want or need.
This can be very hard for parents, but we need to remember that our chief priority is to do what’s best for them, and college isn’t always the right fit. In some instances, a trade school may be a more appropriate choice for them. What matters is that your kids know you support them, so be sure to regularly communicate with them on what their desires are for their career.
Beyond student loans or utilizing college saving vehicles, such as 529 Plans or UGMA/UTMAs, there are a few other college funding options to consider and can help minimize the amount of money you need to save or borrow.
A grant, unlike a loan, does not need to be paid back. The Federal Pell Grant is given to students pursuing a bachelor’s degree with the amount awarded based upon your financial need and the cost of your school. The maximum amount for the 2015-2016 school year is $5,775. You can apply by filling out the Federal Application For Student Aid (FAFSA) and don’t forget to ask about other grants available with your college’s admittance office.
This is one of the most missed opportunities in my opinion. When I speak with parents who are writing checks for their child’s college education and concerned about the costs, many admit their children never applied for any scholarships. You may be surprised by how many local businesses and civic organizations offer scholarships that your child may be qualify for and face less competition over too. Also check out FastWeb, Petersons and College Board to search for scholarships. They should look for and apply for scholarships every year, not just their freshman year.
If you have a desire to serve your country, the federal government helps veterans pay for college through the Montgomery GI Bill. The benefits vary and are based on your length of service and what type of education you plan to pursue. Learn more at the US Department of Veteran Affairs.
I found this fascinating infographic from Consolidated Credit on how tuition costs have evolved throughout the years.
It paints a pretty scary and ugly picture for the rising costs of tuition. Respectfully, I do believe there will be a tipping point eventually. Right now, most still believe the long-term benefits outweigh the cost, but at $400k+ for four years of higher education, those advantages may no longer hold true. Colleges need students and employers need educated employees, so at some point, there will need to be a course correction.
How are you saving for college? Do you think tuition will get that high? If it does, do you think a degree will be worth it?