As parents, we understand the value of obtaining a college education in today’s competitive workforce. According to the U.S. Census Bureau, a typical college graduate earned $11,749 in the last three months of 2011, nearly three times more than a high school dropout’s salary of $4,026. And for most with graduate degrees, the median earnings were $15,733 for the same period.1
But, even though a college diploma can pave the way to greater advancement and earnings potential, paying for it still remains a challenge for most American families. A recent Christian Science Monitor article reports the average tuition for a public four-year state school rose 5 percent in 2012 to $8,655 per year.2 And, at private institutions, students need to shell out a staggering $39,518 per year for tuition, fees, and room and board. All told, in the past five years, tuition costs for private schools have increased 13 percent beyond overall inflation.2
Even as college tuition and other costs reach unprecedented levels, there are still plenty of options available to help ease the financial burden. Look into available state and university scholarships, financial aid packages, special college savings plans, and low-cost loans.
Here are some steps you can take to make the whole process as easy and painless as possible.
- Improve your credit score. Establishing good credit can help you secure the low-cost loans you may need—and save thousands of dollars.
- Plan for the unexpected. Estate planning and the right kinds of insurance will help protect against the derailment of your child’s college plans.
- Save smart and early. Gain a significant advantage and maximize your resources by choosing the college-savings plan that’s right for you.
- Ask relatives to share the responsibility. Talk to grandparents and other relatives about contributing money to your college fund.
Encourage your children to save. Teach your kids to start saving for college early by putting aside a portion of their monetary gifts.
College is a major investment in your child’s future. And, like any investment, it is wise to do as much early preparation and research as possible. It may also be beneficial to consult an experienced financial professional who can advise you based on the specifics of your situation.
1The Wall Street Journal, “College Grads Earn Nearly Three Times More Than High School Dropouts,” Neil Shah, April 2, 2013.
2The Christian Science Monitor, “College Costs Keep Rising Faster than Inflation, Survey Says,” Philip Elliott, Associated Press, August 13, 2013.
About the Author: Tim Mahoney
