Choosing a college becomes a full time job when your child reaches 11th grade, but from the financial perspective, the process needs to start much earlier. College costs have increased substantially, as the latest figures show according to the Department of Education. Take a look on page 6 to see how the cost has increased in 15 years http://federalstudentaid.ed.gov/static/gw/docs/FiveYearPlan_2012.pdf. Parents need to start preparing very early and recognize that the college process evolves as the child develops and their path becomes clearer.
Deciding on college involves your desire and ability to pay. Costs vary widely depending on whether it’s a state or private school, an urban or suburban setting, and whether it is a four year or a two year junior college program. They all have different price tags, benefits and drawbacks. You must decide what best fits your financial ability along with the needs of your child.
The most popular option for providing money for college costs is a 529 plan. Even here, there are a wide number of choices and plans from which to choose. Each state has their own sponsored plans with potential tax benefits from selecting certain plans. Find a qualified Certified Financial Planner® professional to help you understand the plan and investment choices and simplify the overall process. The key is to do your homework and start early.
College expenses include more than tuition and room and board. Costs include preparation for exams, application fees, and travel expenses to see schools and the inevitable visit to the bookstore for tee shirts and other souvenirs. It is best if you are prepared for this beforehand and not overwhelmed with uncertainties when the process starts. Create a reasonable budget for pre-college spending and set those funds aside.
As the child grows and his or her potential is more apparent, preparing for specific situations becomes a little easier. Be prepared for changes-it’s rarely a straight line. Scholarships and loans might be available based on specific talents, financial situations and the needs of the school to fill their rolls with students from different backgrounds and skill sets.
Remember the keys:
- Start early
- Work with a professional planner
- Be flexible
- Know your budget
- Keep your sense of humor—it will all work out.