[dropcap]W[/dropcap]hile teenaged kids across the nation are going to start preparing for their SAT tests (given from October through June) and exploring undergraduate programs, parents are going to be left aghast at the current and continually increasing price tag on ‘that’ pending college education. However, there are smart ways to prepare for this inevitable expense, and there are less desirable options available as well.
College selection, the application, and the funding/financing process can be overwhelming for most parents. As I am a proponent of taking a proactive approach to future events (see first article), planning for how you will tackle each step and deciding who will have what responsibility in the process will make the whole experience less painful. Since cost may be a primary factor, it is important to discuss this openly with all parties involved (your child, spouse, advisor, etc.) as soon as you can.
If cost is going to be the largest limiting factor for obtaining an undergraduate or post-graduate degree, using more affordable colleges (aka community colleges) during early general education years can be a great way to limit the overall expense of your (your kids) degree. Using state schools close to your home can also shave $1,000’s off of the annual bill for a comparable state school located further away. If you anticipate an extremely competitive admissions requirement at the school of your choice, then find out from college counselors what activities aside from grades will make the largest impact on your acceptance factor. Talking about and planning for this very early in your child’s life (even 7th, 8th, or 9th grade) should help ease the process while improving the chance of acceptance.
There is also the opportunity of securing discounts from private universities (they like to call these scholarships). Because of this, private universities are not necessarily the most expensive route to an excellent education at a top school. Loans for parents and students are available through a variety of lenders…the most predominant being Sallie Mae. Parents can take out Parent Plus loans if needed, and students can continue the pursuit of grants and private scholarships on their own.
While your tax person may know this, you may not: The IRS offers tax credits for educational expenses incurred by families paying for college. However, like any government program, there are limitations regarding how much credit (or cash back) you receive upon tax filing. Regardless this is an excellent opportunity available to qualifying families who have a modified adjusted gross income under a certain threshold. See the IRS website here….. IRS Q&A of the American Opportunity Tax Credit for specific information on this opportunity.
While college is not for everyone, it may seem that everyone actively seeking work right now has at least a four-year degree of some sort. Additionally, it seems that many of these recent college grads cannot secure a job remotely close to the degree of which they studied. The exception might be degrees that are specific to jobs that are currently in high demand.
According to the Career Builder and Economic Modeling Specialists International top jobs report for 2013, jobs forecasted to have the greatest amount of growth are: nursing, computer systems analyst, accounting, market research, human resource, sales reps, mechanical engineers, web developers, and management. Consider a degree that provides services to these industries or trades, and you might have a better chance of becoming gainfully employed in a lifelong career.
Finally, saving for your children’s college education is a habit. No, you don’t have anything to show for it while you are saving—other than a quarterly statement. And the opportunity expense of saving for college instead of spending it can be difficult, mentally and physically, at times. But when that day arrives–when the first college tuition bill hits your mailbox–wouldn’t it feel a little better to know that you’ve already got some money ear marked for that payment?
Call my office to discuss the various ways to prepare yourself and your child for the costs of college. By acting early, we can slowly take on the entire process.