Get the Most From Your Tuition Planning Strategy

With tuition costs on the rise, planning for college is one of the biggest hurdles parents will face. With the average annual cost of attending a public university last year set at $22,261, excluding meals and housing, four years would run the bill up to a staggering $89,044. And since tuition is destined to go up annually, you could reasonably expect those numbers to double by 2030 when factoring in inflation and yearly increases.

Here’s the good news: plenty of tools and strategies exist that can help you prepare for this major financial step. Whether you’re already waiting for responses to college applications or getting ready for an event that’s still eighteen years away, you can take active measures to improve your college savings plan. When it comes to successfully raising enough money to pay for a college education, a comprehensive game plan can make a big difference.

 Start planning and investing early

The sooner you can start saving, the better – in fact, starting from birth is ideal. A 529 plan is one of the best financial vehicles for college savings. The money you put into it for college expenses is tax-free and it’s more flexible than other programs you may find out there, including prepaid tuition programs. You can also open a Coverdell ESA; however, this program comes with some restrictions, like a cap on the amount you can deposit each year.

The reality is that few families could send their kids to school without the help of some student loans, but the more you can pay out of pocket, the better. You’d need to save $200 per month from birth for each child to get within the ballpark of covering their entire tuition by the time they reach college age, and if they’re headed to one of many private colleges, you’d need to sock away $300-$500. Don’t be discouraged by these numbers – every dollar you save before the start of college is a dollar your child will avoid paying interest on had they received it from a loan provider. Consult a financial advisor or credit union representative to work out the best strategy that fits your situation. Be sure to ask about tax deductions and education credits.

Seek family support

If extended family members want to help shoulder the burden of your child’s tuition costs, invite them to explore the same higher-return options that you might choose. A well-meaning grandparent who gives your child a savings bond may not even be aware of the advantages of newer savings vehicles like 529 plans. Creating a family strategy will help lighten the burden and optimize your savings plan.

Research scholarships and awards

If you haven't saved enough and need extra funds, scholarships can make all the difference, and there are thousands available. You should begin researching while your child is still in their middle school and early high school years. Local civic clubs, employers and religious organizations are some of the most common sources of scholarships. You can search for scholarships online through special search engines, as well as publications like the The Ultimate Scholarship Book.

Consider a junior college

You can save a lot of money if your child attends a junior or community college for their first two years. Junior colleges typically offer excellent support services and can be a strong transitional step between high school and a four-year university. Most Junior Colleges offer two-year block transfer degrees that can be transferred into a four-year institution. With that said, you want to make sure that everything is transferable ahead of time to ensure the credits will apply toward your child's four-year university pick.

Your child can work part-time while studying

Many students take advantage of part-time jobs to help with expenses; in fact, this is becoming more and more the norm rather than the exception. Working part-time can give your child real-world experience that will supplement their academic education. Plus, it can produce the satisfaction and responsibility of contributing to their own education.

Even though the numbers can be scary, there are many ways to mitigate the struggle of saving for college. Aim to start a savings vehicle like a 529-savings plan as soon as possible, save what you can and add more whenever you’re able. Don't be afraid to ask family members for assistance, research scholarships and consult a financial planner. Savings up for college doesn’t need to be as daunting as you might think!

 

^ Sara Collins, NerdWallet

 

Special thanks to our friends at NerdWallet for sharing their expertise with the members of Tropical Financial Credit Union.  As a mom with a senior in high school, this information is especially valuable to me.  Who would have thought saving $50/month in a 529 plan for 18 years wouldn't be enough. Hope you have enjoyed Sara's tips for getting the most for your tuition planning strategy, looks like a job at college is definitely in my daughter's future - thanks Sara! ^Amy