College Savings Plans: How Much Do You Really Need?
The Real Cost of Saving and How Much You Need
Benjamin Franklin stated, “an investment in knowledge pays the best interest…” Most successful adults advise youngsters to obtain at least a bachelor’s degree. Emerging technology has made acquiring a degree more flexible and user-friendly. It is now possible to get a bachelor’s degree online in two years from a university that is three states away. You don’t even need to leave your bed, but the rising cost of tuition has made many students question whether a college degree is necessary.
How much is my Degree Going to Cost?
U.S. News and World Report recently identified the schools listed below as up-and-coming universities. For the most up-to-date figures, please visit the respective university or college website.
- Public Schools: The figures below represent undergraduate tuition per semester (12 credits) for a full-time student. The lower number represents tuition per semester for in-state students. The larger number reflects tuition rates for out-of-state students. The average degree requires 120 credits.
- $4,733.50 to $9,935.00
- $7,580.00 to $11,827.00
- $8,966.00 to $26,898.48
- $6,527.00 – $15,244.00
- Private: The figures below represent undergraduate tuition for a full-time student for one academic year.
Public vs. Private School
Attending a private university can cost two to four times the cost of a public education. A private education can start as early as kindergarten. At the higher education level, private universities often offer academic excellence, top-rated professors, a small-knit community feel, small class sizes and the opportunity for prestigious scholarship. While these are all things a public university may offer, private schools are often highly regarded with a long-standing reputation for excellence. College Confidential, Business Insider and College Data offer useful tips for deciding which type of institution is a better fit for your brain and wallet.
What Other Expenses Can I Expect to Pay During My First Year at College?
Depending on whether you are a full or part-time student, you may be required to pay other fees in addition to tuition.
These fees and expenses can include:
Universities will provide a breakdown of the fees included in your tuition. If you are a part-time student, you may not be required to pay certain fees. Be sure to check with your university to determine if any expenses are optional.
How Can I Save for College?
Many education saving programs exist for parents who are preparing for the cost of college down the road. Below are two ways to begin a savings plan for education, whether you plan to enroll your child in private or public school.
- Invest Tax-Free: When possible, invest your money in tax free accounts. Consider opening an education savings account (ESA). If there is money in the account after your child graduates from high school (you can use these funds to pay for private or religious grade school), it can be used tax-free for college.
- 529 Savings Programs: The money in the 529 savings accounts can be applied to tuition nationwide, which is great, if your child chooses to leave your home state for college (many in-state tuition plans are void if the child seeks education out-of-state). In addition, some states offer a tax deduction for funds deposited into a 529 savings account, so it is possible you will benefit from opening this savings account.
What If My Parents Did Not Put Money Aside for College?
When it comes time to pay the first tuition bill, many students are left with only one option: student loans. Student loan debt has surpassed auto and credit card debt; more money is owed because of tuition and college-related expenses than money owed on unpaid credit cards. Education debt is nearly $1 trillion dollars, twice what it was in 2007.
Do Your Research
After all, college is about research.
Apply for the free application for student aid or ‘FAFSA’. Once the application is approved, this can help you to determine how much free money you will get from the Federal Assistant Program, how much you can borrow through Federal Loans, and how much you may still need to supplement through private lending agencies.
If taking out a loan is your only option, be sure to do your research. Taking out a student loan is serious business, so be sure before making a decision. Below are a few tips to creating an education payment plan, which is strongly advised before you take out a loan.
- Don’t take on debt that is more than your estimated first years’ starting salary. Take personal responsibility and ownership of your life.
- Learn the difference between federal financial aid & grants, federal and private loans.
- Apply for scholarships like your life depends on it.
- Consider alternative ways to pay for your tuition (for example, if you plan to join the military or work full-time for a university- internship, or global internship programs, you may qualify for tuition benefits).
- Consider starting at a community college (many students study for two years at a community college and then transfer to a state university to save money).
An education is a powerful tool; make sure you put that knowledge to use before signing on the dotted line.
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