The costs of a college education continue to rise like a hot air balloon and many fear that they will soon be beyond their reach. Some experts have estimated that the cost of an average four year program at a public college or university may cost as much as $100, 000.00 in fifteen years from now. That's a lot of money, regardless of your current income.
The good news is that you can play now to avoid that super-hit later on. You may not be able to control the costs of a college education, but you can find ways to lesson that blow. One way is through a 529 college education savings plan and even if your child does not decide to go to university later on you can roll it over to someone else in the family who does.
A 529 plan is named after its section number in the IRS code is a savings plan for college education and when you open an account you have a number of options to choose from.
Those options include prepaying tuition at a qualified educational institution at today's tuition rates or you can save money in a tax-deferred account that can only be used to pay for education at future tuition rates.
529 accounts work because either your investment earnings will grow to meet the higher costs of future education or you will have already prepaid for your child's college education. Most people favor the savings account option because they feel that is most attractive but it really depends on your individual finances and your risk tolerance.
A 529 plan is a state-sponsored investment program. That means that your state sets up the plan with an asset management company and you open a 529 account with that asset management company that must live with the state's desired plan features. You still own the account and you designate a child as the beneficiary of that account. All of your dealings will be directly with the asset management company that has been designated to manage the 529 plan for your state.
Depending on the state you live in there will be variances in some of the procedures that you have to follow and conditions on the asset management companies investment strategies. Most plans are very similar but there are no restrictions on which state you choose to invest in so it may be worth your while to check around.
Whatever plan or option you choose a 529 plan will help relieve your worries about how you will ever pay for your child's college education.
Cost Of A College Education
When it's time to estimate the cost of a college education, most teens and their parents quickly add up tuition, room and board. But what about the additional costs of higher education? The sticker shock of college can often send freshmen and their parents reeling. By taking a look at the broader picture in advance, preferably while teens are still in the early years of high school, parents can be better prepared to afford the true cost of today's college educations.
Textbooks for classes average roughly $800 per semester today, with some majors requiring books and lab equipment that cost far more. If you're going to major in engineering, you can expect to pay as much as $1,500 some semesters during your upper level courses. Add in printing supplies, notebooks and all the other school necessities as well to the tune of another $200 for the year.
One thing is inevitable when lots of people live together in close proximity, they will get sick. Particularly freshmen. Studies have shown that the average freshman university student spends almost one hundred dollars on items like cold remedies, tissues, cough syrup and other over the counter medications.
The dining halls may have a lot to offer, but no student can go without pizza and burgers for too long, so we'll list this as a necessity. Figure on a few hundred dollars each semester for take-out and delivery foods. Be honest and adjust accordingly if you're really into eating out. Some people like to eat at a really nice restaurant once a week; others are fine with McDonald's all the time.
What about transportation? Will you be keeping a car on campus? Then you'll probably have to pay for a university parking permit. Will you be driving home regularly on the weekends to see your family and friends? Taking road trips with your new college friends? You'll need money for gasoline, upkeep on your car and auto insurance. If you will be attending school thousands of miles from home, it can be quite expensive to fly home for the holidays, so make sure you book flights well in advance to save money.
Computers are as essential as textbooks for students today. Be sure you check with your college or university to see if they recommend a particular brand or model; some offer special discounts that can save you hundreds of dollars.
Cell phones can vary vastly in cost; be sure to compare plans and check out the coverage at your school. If you can stay with a family plan that has full coverage in the area where your school is located, it's probably your best bet. Be aware, though, that cell phone bills for college students often go up sharply freshman year because of phone calls home and to high school friends. Text messaging can also jack up the cost, so review the bill each month and adjust your plan if need be.
Internet access is another reasonable expense that you'll probably want to consider if you live off-campus in an apartment. While there will be free internet access at many points on campus, including libraries and classrooms, its much easier to work from home, so the investment, which is usually less than twenty dollars a month, is worth it.
Entertainment, including movies, dances and shows, are popular on college campuses. Fortunately, the campus centers usually offer them at a reduced rate to save students a bit of money. The occasional new game cartridge, CD or MP3 download should also be budgeted for. Again, be honest with yourself when estimating how much you're likely to spend so that you're prepared.
When preparing for the hidden expenses of college, students need to sit down with their parents and honestly evaluate how much money they think they will need and plan ahead to add these to the more obvious expenses of tuition, room and board. The resulting figure they come up with will give them a more accurate idea of the real cost of a college education.
Both Simon Harris & Andy West are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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