College Planning - the First Financial Hurdle

Few doubt the value of a college education in helping individuals achieve financial success. But these days, a good education comes with a price tag, one that has been growing faster than the standard cost-of-living for many years.

Saving for a child's higher education is one of the first financial priorities for many parents. It can be a monumental challenge, but fortunately, there are many methods that can be used to maximize a college savings program.

A serious cost issue
A college education is a significant investment that needs to begin early in a child's life. Why? Simply because education costs continue to soar. Don't count on a "pay as you go" strategy to cover college expenses. It is important to have money set aside to make the going easier when the actual bills come due.

Consider this fact about the cost of higher education. According to the College Board, the cost of a year at school rose by more than 60% over the past ten years:

The rising cost of college Annual expenses for tuition and fees
Year	Avg. Public School Cost	Avg. Private School Cost
1991	$2,137	$10,017
2001	$3,510	$16,332
2011*	$5,756	$26,621

Source: The College Board
Projected cost assuming the percentage change over 10 years matches that of the previous 10-year period.

What you can do
It makes sense to start saving as early as you can. The sooner you can put money to work, the less you will need to invest on a monthly basis, and the more the time value of money can help build your savings. Now, there are new, tax-advantaged ways to save for college, ranging from IRAs to state-sponsored 529 college savings plans and, in some circumstances, even life insurance.

If your child is already nearing college age, you need to begin a more aggressive education savings plan. Remember that financial aid programs can also play a role.

And there are other considerations, such as whether the money put to work should be in your name, or that of the children. In any case, college planning is a priority that you can't afford to put off.

Content is for informational purposes only and may not accurately reflect your specific situation. Information is not intended to provide financial, legal, tax, or accounting advice. You should consult a qualified advisor for advice specific to your own circumstances.