As parents, our kids’ welfare is at the very top of our priority list. We want them to have the opportunity to succeed, and in today’s world, that likely means attending and graduating from college.
With tuition costs rising 2.6 percent every year, a rate that is nearly eight times the average growth in wages*, saving for your children’s college can be a daunting task. However, with proper planning and the help of your trusted wealth management advisor for doctors in Boise, ID, it is possible to be prepared to assist your children in their educational goals.
So, how much will college actually cost you? There are three important factors to consider.
1. Cost of Tuition
Perhaps you remember working your way through college without accumulating too much debt. Well, for many Baby Boomers and Gen Xers, this was an attainable task. However, since the 1980s, tuition costs have nearly doubled. Today, college graduates are entering the workforce with not only a degree but an average of $29,800 in student debt**.
In 2019, the average tuition price for four years at a public, in-state school totaled over $40,000. That price increases to over $80,000 for out-of-state schools and to $147,000 for private Universities***. What type of school do you foresee your child attending?
Additionally, you will need to take inflation into account. The college inflation rate, which is higher than the standard inflation rate, is typically around 3.2 – 3.7 percent.
2. Cost of Other College Expenses
Tuition isn’t the only factor to consider when calculating the cost of college. Campus visits, application fees, housing, meal plans, books, and student fees are among the many other things that pull at the wallets of parents who have college-aged students. Be prepared to have extra money tucked away for these and other miscellaneous expenses.
3. What Will Your Child Contribute?
When crunching the numbers, it can all seem a bit overwhelming. However, remember that you don’t have to pay for every cent of your child’s education. Consider scholarships, grants, loans, and other alternative ways to pay for college.
Additionally, you will need to evaluate what you expect your child to contribute. Some parents feel that allowing their child to work and pay for part/all of their college experience teaches hard work and financial management. On the other hand, many parents feel that assisting their child financially gives him/her the opportunity to focus completely on education and reach their educational and career goals. Still, other parents have found a balance between the two, perhaps allowing their child to pay for housing and books while they pay tuition, or some other agreement.
Ask yourself, what will work best for your family situation? What values do you want to cultivate and teach your children? What is most important to you and your family?
Perhaps most importantly, work with a financial expert as you plan for your children’s college. An expert you trust can ensure you have the right college savings plan for your situation (see a comprehensive analysis of college savings plans here). At IMA Financial Services, we are dedicated to helping you and your family achieve your financial goals, which is why we offer everything from insurance planning to physician retirement planning in Canyon County and surrounding areas.
Contact an IMAFS advisor today for more information.