During the 2022–2023 academic year, the average cost for one year of college—including tuition, fees, room, board, and other expenses—was $27,940 for public four-year, in-state schools and $57,570 for private universities. That works out to a six-figure commitment for a four-year degree, and these costs may get higher.1
Footing the higher education bills for your child or grandchild may seem daunting, but with the right type of preparation, it doesn't have to be out of reach.
The first thing to remember is that while the price tag for college is rather eye-popping, not everyone pays the full price.
For example, one study found that 89% of students going to the most selective institutions don’t pay full tuition. So, although the cost of college has roughly doubled in the past 30 years, financial aid and merit scholarships have risen at a similar pace.2
However, even with aid and scholarships, college is still a major expense. Here are a few tips I like to share for those starting to think about saving for college:
A Word of Caution
- Don't put off saving for college. If it's one of your goals, getting an early start can help put you in a stronger financial position.
- Have an early and honest conversation with your family and college-bound children about how much you're prepared to spend. Don't let your student buy the sweatshirt if the school’s cost is prohibitive.
- Remember: While retirement is a necessity, parent-funded college education is a luxury. Think twice before dipping into a retirement account to pay for your child's or grandchild's education.
A Word of Encouragement
- Consider starting a college fund for your child's or grandchild's education. There are a number of programs for this, including some that offer tax advantages.
- Submit the Free Application for Federal Student Aid (FAFSA) to your student’s target college, even if you don't expect to qualify. Submitting this form may help put your student in a position to accept any grants or scholarships before considering student loans.
- Search for scholarship opportunities, which are offered by many organizations. Unlike student loans, they may not have to be paid back.
- Consider federal student loan choices before exploring private loan programs. Federal loans may have benefits not offered by private loans.
We've helped clients implement college strategies that take into account a wide variety of funding choices, and this is an extremely rewarding aspect of our role as financial advisors.
If you or anyone you know would like to discuss college strategies, feel free to contact us anytime.