Thursday, August 19, 2010

Where To Start When Thinking Of College Savings

The Bureau of Labor reported for the month of July that unemployment remained unchanged at 9.5%. The long term unemployment ranks (jobless for more than 27 weeks) remained unchanged at 6.6 million. Many of the people were blue color jobs, factory workers, and hands on workers such as the tool and die trade, where machines are taking over previous jobs completed by a person. With those kinds of statistics out there, the bottom line is you have to have a degree to compete. When the economy hit bottom, my husband was one of those unemployed for over a year. He had numerous trades he knew, one of them being high level computer skills such as networking, repair, programming, you name it. He applied for many jobs that required his specialized knowledge, and he had plenty of experience that could vouch for his skills. However they didn’t even give him the time of day without the piece of paper from a university or college to back it up. Higher education is a must in today’s job world.

I didn’t get assistance from my parents for tuition, why should I take out of my retirement to pay for college?

With your financial assistance and support, your student can be out of school that much quicker and into the job market. In a job they are bringing money in to pay off student loans instead of hanging in limbo, halfway through a degree, and their fourth year of school approaching. In today’s economy you can’t count on students working to help fund college. The Bureau of Labor reported that the highest unemployed population was teenage, coming in at 26.1%. Who’s going to take a chance on a teenaged employee, when you can hire a middle aged, more reliable, employee who would be thankful for a minimum wage job. The bottom line is if you start saving early you can make a significant difference in your child completing college. You don’t have to pay for every penny of tuition- there are grants, scholarships, and Financial Aid that will assist with some cost. However, whatever you can save, and as early as possible will make it that much more likely that your student walks away with their completed degree.

Step 1: Look at average tuition costs.

According to the College Board, which is a nonprofit group made up of hundreds of higher education schools around the nation, here’s a look at averages tuition rates right now:

  • Four year university, in state: $19,388
  • Four year university, out of state: $30,916
  • Private four year university, in state: around $38,000
  • Two year schools: $14, 285

Did I mention that those figures are annually? So multiply accordingly on however many years it will take your student to finish school.

Step 2: Figure in inflation.

If you’re like me, and starting early you are looking at 18 years of savings yet. In that case, if you still have a few years before your child leaves the nest factor in inflation rates as well. The website has a calculator on their website that will help you determine a number to shoot for by factoring in today’s average tuition, an inflation rate (they recommend 5%), years of saving that you have, expected years of attendance and the percent of the college costs that you plan to use your savings on. Start early and you have compounded interest to contribute to your end amount.

Step 3: Decide how to save.

There are many different ways to save for college. There are ways to invest, savings, and special education savings plans, as well as tax breaks. Stay tuned for the next blog which will go more in depth on your options.

Share your thoughts: What's your biggest concern for your child's future?

Did you know can help you save more for college? Every dollar counts!

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