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College savings success stories: Anonymous tips
http://www.savingforcollege.com/articles/college-savings-success-stories-anonymous-tips-632
Posted: 2014-06-06
For many families, the mere thought of saving money for future college costs makes them uneasy. A large number of parents are still continuing to chip away at their own student debt, and with tuition prices rising at a record-breaking pace they wonder how they will ever come up with the money. Although this a valid concern, according to a recent MarketWatch article experts believe that the availability of more alternative college solutions, coupled with the fact that tuition costs have reached a breaking point will ultimately slow, or even reverse, the college inflation rate. But don’t break your piggy bank just yet.
Even if this deflation theory proves to be true it is unlikely that today’s parents will be able to afford higher education for their children without proper planning. With today’s costs about 150% higher than what they were 30 years ago, tuition prices have a long way to go before they would be considered affordable.
At Savingforcollege.com, we want to ensure parents and students that paying for college is in fact, an attainable goal. In addition to providing comparison tools, 529 plan finder and informative videos and articles, we also solicit the help of our readers to offer up tips on how their own families were able to foot the bill. Visit our forum to share your own college savings tips with other families.
Last week we received some great advice for parents on how to get the best education bang for your buck from a message board post that we’re excited to share:
1. Get over the community college stigma.
One way to really cut down your total college costs is to have your child attend a community college for two years before heading off to a university. Today, junior colleges are more than just a place to go when you don’t get accepted into a larger school. In fact, there are many advantages to starting out a community college including smaller class sizes, a chance to finish up core courses at a lower price and flexible class schedules for students who are working to save money for a four-year school. This idea is becoming very popular and we are even seeing honor students take advantage of what their local community colleges have to offer.
What can parents of high schoolers do to prepare for college?
2. Start saving money as soon as your child is born.
A 529 plan is an investment account that grows by the magic of compounding. That means every dollar you invest will earn interest, and the interest will be added back to the principal so that in the next period you will be earning interest on interest. Because of this, you could pay a hefty price if you wait to start saving. For example, if you make an initial contribution of $1000 to your newborn’s 529 account and contribute $200 each year for the next 18 years you will end up with $9,406.34, assuming a 6% annual investment return. However, if you wait five years to open the account with the same initial balance, annual contribution and investment return, you will only be able to save $6,135.94. That’s $3,270 you would have missed out on!!
Try out the World's Simplest College Savings Calculator!
3. Consider the potential return on your investment.
As we know, the U.S. job market has been rough in recent years, and while we are starting to see an upturn there are still plenty of college graduates struggling to find a job. When selecting a college and field of study, encourage your child to consider how their degree would help lead to a fulfilling career. A good resource is PayScale’s annual College ROI Report, which ranks schools based on total costs to attend and what alumni are earning out in the workforce. US News and World Report also provides an annual list of the 100 Best Jobs based on salary, opportunity, work-life balance and job security.
It’s especially important to consider future salary potential if your child is planning on taking out student loans. They will not only want to make enough to maintain a comfortable lifestyle, but they will also need to be able to afford the monthly loan repayments. Having to come up with an extra couple hundred dollars a month can make a big difference in a family’s budget.
For many families, the mere thought of saving money for future college costs makes them uneasy. A large number of parents are still continuing to chip away at their own student debt, and with tuition prices rising at a record-breaking pace they wonder how they will ever come up with the money. Although this a valid concern, according to a recent MarketWatch article experts believe that the availability of more alternative college solutions, coupled with the fact that tuition costs have reached a breaking point will ultimately slow, or even reverse, the college inflation rate. But don’t break your piggy bank just yet.
Even if this deflation theory proves to be true it is unlikely that today’s parents will be able to afford higher education for their children without proper planning. With today’s costs about 150% higher than what they were 30 years ago, tuition prices have a long way to go before they would be considered affordable.
At Savingforcollege.com, we want to ensure parents and students that paying for college is in fact, an attainable goal. In addition to providing comparison tools, 529 plan finder and informative videos and articles, we also solicit the help of our readers to offer up tips on how their own families were able to foot the bill. Visit our forum to share your own college savings tips with other families.
Last week we received some great advice for parents on how to get the best education bang for your buck from a message board post that we’re excited to share:
1. Get over the community college stigma.
One way to really cut down your total college costs is to have your child attend a community college for two years before heading off to a university. Today, junior colleges are more than just a place to go when you don’t get accepted into a larger school. In fact, there are many advantages to starting out a community college including smaller class sizes, a chance to finish up core courses at a lower price and flexible class schedules for students who are working to save money for a four-year school. This idea is becoming very popular and we are even seeing honor students take advantage of what their local community colleges have to offer.
What can parents of high schoolers do to prepare for college?
2. Start saving money as soon as your child is born.
A 529 plan is an investment account that grows by the magic of compounding. That means every dollar you invest will earn interest, and the interest will be added back to the principal so that in the next period you will be earning interest on interest. Because of this, you could pay a hefty price if you wait to start saving. For example, if you make an initial contribution of $1000 to your newborn’s 529 account and contribute $200 each year for the next 18 years you will end up with $9,406.34, assuming a 6% annual investment return. However, if you wait five years to open the account with the same initial balance, annual contribution and investment return, you will only be able to save $6,135.94. That’s $3,270 you would have missed out on!!
Try out the World's Simplest College Savings Calculator!
3. Consider the potential return on your investment.
As we know, the U.S. job market has been rough in recent years, and while we are starting to see an upturn there are still plenty of college graduates struggling to find a job. When selecting a college and field of study, encourage your child to consider how their degree would help lead to a fulfilling career. A good resource is PayScale’s annual College ROI Report, which ranks schools based on total costs to attend and what alumni are earning out in the workforce. US News and World Report also provides an annual list of the 100 Best Jobs based on salary, opportunity, work-life balance and job security.
It’s especially important to consider future salary potential if your child is planning on taking out student loans. They will not only want to make enough to maintain a comfortable lifestyle, but they will also need to be able to afford the monthly loan repayments. Having to come up with an extra couple hundred dollars a month can make a big difference in a family’s budget.
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