Cramming for the cost of college

The thought of saving for college crosses almost every parent’s mind, sometimes even before their child is born. Yet, for obvious reasons, a college savings fund often does not become a reality until many years later, if ever.

  Few would dispute the value of a college education. Still, the price of a degree could jolt almost anyone’s budget. During the five-year period ending in 2007, the nation’s average public and private college costs rose by 31 percent and 41 percent, respectively.

  When on-campus housing, books, supplies, transportation and other personal costs are factored in, the average cost to attend a public four-year university or college for one year is $17,336, and $35,374 at a private institution.

  Consider this: students are taking an average of more than six years in public four-year colleges and more than five years in private four-year colleges to earn a bachelor’s degree.

Reducing sticker shock
  To help you determine how much money you will need to pay for an education once your child reaches college age, there are a number of online calendars such as those at www.finaid.org, www.collegeboard.com and www.nmfn.com. Involve your child in the process to determine if your child:
• plans to attend a private or public college or university, community college or technical institute.
• wants to live at home or on campus while attending school.
• may take more than four years to finish school.
  It is never too early to begin saving for college. A great place to start includes any of the most popular plans used today such as Section 529 plans, Coverdell Education Savings Accounts (ESA), Custodial Accounts and life insurance. In addition to the possible benefits of compounding, these plans may also provide some great tax advantages.

Better late than never
  No matter how late in the education savings game you get started — and if after factoring in the amount you’ve already saved you still fall short — various options may be available including the following:

• Grants and scholarships: Your child need not be a budding Einstein in order to qualify for some of the existing scholarships. Grants based on such factors as your income, place of employment, or even a relative’s military service, are available to qualifying individuals.

• Student loans: The Federal Student Aid Information Center provides a variety of free publications that are available by calling 1-800-4-FED-AID (1-800-433-3243). Their Web site www.federalstudentaid.ed.gov allows you to complete the Free Application for Federal Student Aid (FAFSA) online. It also provides tips on reducing college costs, finding non-federal scholarships and other helpful topics.

• Home equity loans: In some instances, the best option to help pay for college education can be leveraging the equity in your home. Banks offer a variety of programs, from flat loans at a fixed interest rate to lines of credit that can be accessed on an “as needed” basis.

• Life insurance: The cash value of a life insurance policy is one of the few assets not considered in determining eligibility for financial aid. If you have a permanent life insurance, you may have an additional source of cash. Your insurance representative can help you determine how much cash is available in policies you own as well as any potential implications that may arise.

  Above all, don’t be afraid to ask for advice when planning for your child’s education regardless of how late you might be starting this process. Financially, emotionally and psychologically, it is probably one of the biggest investments you will ever make. And, the impact on your child’s future will last a lifetime.

CLICK HERE TO VIEW THE MAGAZINE ONLINE