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Being Financially Prepared for a College Bound Child

Planning for Future College Costs

For many young people, having a college degree is the starting point for getting a job in the career field they desire and having an opportunity to earn a living wage early on in life. Unfortunately, the affordability of college has become challenging to manage as the cost of earning a degree has steadily risen over the last several years.

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These realities of higher education make it necessary to create a plan for paying for college as early as possible. Parents, family members and prospective students can start this daunting task by understanding where college costs are currently and where they're potentially headed in the future. Here’s how:

  • Understand current college costs: Each year, data is collected on how much earning a college degree costs, based on tuition details gathered from colleges and universities throughout the country.
  • Estimate future college expenses: On average, college costs rise each year at about two times that of the average rate of inflation.
  • Learn how to best prepare now: Some families utilize college-specific accounts, such as a 529 plan, that offer advantages over standard savings accounts. A 529 plan gives families the ability to invest the money set aside for college on a tax-deferred basis.

There is a continual increase in the demand for college degrees among both employers and young adults coupled with steady decreases in state funding received by colleges and universities. This means that rising costs for attending college are likely to continue for years to come.

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Overall, saving for future college costs can be an overwhelming task. The rising cost of earning a degree makes it challenging to know just how much is needed for the future. Additionally, meeting such a significant financial goal can burden households when there isn’t much room in the budget for extra savings. After calculating the future cost of college, one of the best plans of action is to determine what you can comfortably set aside and begin doing so as early as possible.

For more information on financial planning for college costs, access the full article click here.

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