The average college expense (tuition, fees, room, and board) at a four-year, in-state public institution for the 2016-2017 academic year was $20,090, up 0.9 percent from the prior year, according to the College Board. Expenses at private institutions averaged $45,370, experiencing no change from the 2016-2017 academic year. So, is it worth it?
More than 65% of respondents to the Mid-Year 2014 Consumer Survey by the Ohio Credit Union League noted a college degree was worth the financial investment and more than 63% said saving for college expenses was important to them. Just more than 30% indicated they believe student loans are a good way to finance a college education.
Recent evaluation of college pricing revealed the expense of a post-secondary education continues to increase, as does the level of student debt.
In light of all of this, how can consumers feel confident about financing a college education?
- Start Saving Now. Whether you are months, years, or decades away from paying for college, start saving today. The earlier you begin putting money into a college savings plan, the more time it has to grow.
- Seek Scholarships & Grants. Before you borrow, make sure you have exhausted all sources of free money. Opportunities can be found through academic and athletic performance, workplace benefits, church and community organizations, in-state lottery-funded programs, and even your local credit unions.
- 529 College Savings Plans. Each state offers its own 529 savings plan or plans, some with special tax incentives. All account earnings are tax free at the federal and state level, as long as the money is used for higher-education expenses such as tuition, fees, books, room, and board.
- Individual Retirement Accounts (IRAs). You can use money saved in an IRA to fund educational expenses. With an IRA, you can avoid the 10-percent early withdrawal penalty if the funds are used for qualified college expenses. If you end up not needing the funds for college expenses, the money can remain in the IRA for future retirement.
- Coverdell Education Savings Accounts. You can also put money aside in a Coverdell Education Savings Account. The non-tax deductible contributions are capped at $2,000 per year and the account grows tax free until the funds are distributed.
It’s always a good idea to speak with an experienced financial advisor about college savings goals and financing options. There are advantages to every choice, you just need to understand each and decide which the best is for you and your financial situation. Despite the significant financial investment, there is a true return in the job market.