According to recently released reports from the College Board, most students and their families can expect to pay, on average, from $108 to $1,398 more than what they paid in 2008 for this year's tuition and fees, depending on the type of college. And with inflation rates continuing to increase, these costs will likely double and even triple in the years to come.
Although these costs are quite daunting, there are ways that parents and kids can prepare themselves for the sticker shock of attending college.
First and foremost, you want to make sure you are basing your college saving decisions on your families’ personal strategy rather than the stock market, which has been like a gambling roller coaster this past year. A few other savings tips for parents include:
- Next pay raise, take 1/2 or 1/3 of it and put it in a 529 plan to get tax deferred and tax free gains.
- Sign up for www.upromise.com where corporations will share in their profits and provide money to your children's college fund on products that you already buy.
- Look for credit cards such as American Express linked with Fidelity where 1.5 percent of anything you charge will go into your kids’ college fund. Citibank has similar card.
- One of the keys to finding the right card is to find one where the money transfers from your credit card or upromise.com account directly into the 529 plan. That way, you don’t have to manage the transfers yourself.
- Re-prioritize your monthly savings goals to fit the need. If one kid is in college and one is approaching grad school, determine which one to tackle first.
- Strategize with your kids to spend one to two years at a community college to save funds which will make your dollar stretch farther.
And finally, don’t put it all on yourself! There are things that your child can be doing to contribute to their college savings. Different banks and credit unions have special accounts for teens saving for college. Be sure to ask at your financial institution and have your child contribute some of his or her part-time wages to the account. Since today’s teens are so tech-savvy, have them research various scholarships, grants and federal aid available to them and help them fill out applications.
Julie Murphy Casserly, CLU, ChFC, CFP® is a 14-year veteran of the financial services industry and founder of JMC Wealth Management in Chicago. Julie helps people understand how their emotional attitudes and behaviors affect how they earn, spend and save. To purchase her award winning the book, “The Emotion Behind Money,” please visit http://www.emotionbehindmoney.com.