Category: College Planning
Paying for a university education is expensive, ranging from about $20,000 per year at a state university to more than $40,000 for out-of-state or private school tuition, room and board, fees, etc. From work-study programs to scholarships, there are many ways to lower overall costs.
One strategy is to earn college credit for studies outside of the university’s traditional classrooms. For example, many high school students take AP classes, which not only positions them well for admissions but also (potentially) earns college credits.
A student can reduce overall expenses by earning credit hours through AP courses and similar methods. But be sure to confirm with university admissions officers, advisors, etc. that these efforts (and associated expenses) will actually move your student closer to graduation with a bachelor’s degree.
When one of my sons applied to college, I learned that even if I’ve saved enough to pay for tuition and related expenses, a college-bound child is still eligible for a federal student loan. Federal Direct Unsubsidized Loans are available to students regardless of financial need.
Rather than cash out investments to pay all of our college bills, my child may decide to take a student loan to cover extra expenses associated with attending an out-of-state university. But before accepting the loan, it makes sense to review the costs of borrowing.
If I had young children and wanted to set aside money for their education today, I would choose a 529 Plan over a Coverdell ESA or UTMA/UGMA account. I’d also be smarter about the way I funded the account, either arranging gifts directly to an account (for grandparents, aunts, and uncles who ask what my kids want for birthday and Christmas celebrations) or placing cash gifts my kids received into an account. Here are tips on how to channel gifts to college savings.