The Real cost of college?
If you have children who are college-bound, it’s never too early to start thinking about paying for college. For a lot of parents, this also means anxiety about the rising cost of college. College can be expensive, but it’s important to be informed about all the options and strategies that can make those ivy-covered halls affordable for all. Here is some information to keep in mind:
1. Open and fund a 529 plan, even if it is small. It’s best to start putting money into these college savings plans as soon as possible. The real advantage of a 529 plan is tax-free growth of investments. The more time you have, the better. Many states also offer a state tax deduction when you contribute. We can send you more information about 529s and offer guidance about your specific situation.
2. Understand how college pricing works. There is a difference between the sticker price and the net price. Ignore the sticker price (i.e. the published price of tuition) because almost no one pays this. Look for the net price. The government’s College Scorecard (https://collegescorecard.ed.gov/) lists the average net price by college. Each college will have a net price calculator on its website. This allows you to estimate, according to your family income, what your child would pay for a particular college. Even at expensive private universities, almost no one pays full price, including high-income families.
3. Scholarships are plentiful. Your child does not need to be a water polo or sailing prodigy to get a scholarship to college. In fact, only about 1.3% of undergraduates receive sports scholarships. Not all of them offer full rides. Getting an academic scholarship is much easier and not nearly as competitive. 25% of students at private institutions receive merit scholarships (not based on need) and 18% of students at public universities do. So hitting the books can yield more money for college than hitting the gym.
4. Aid is ubiquitous. Need-based financial aid is available for families who qualify and fill out the FAFSA. This is usually a combination of loans, grants, and scholarships. 86% of students receive financial aid.
5. Plan ahead. Talk with your child about their college plans, your family’s resources. Understand the value of a college education vs. the cost.
6. Don’t believe all the college tuition hysteria. There are many affordable college options out there.