College Savings Fund

The best college savings fund ideas.

Who Pays for College?

Parents have differing opinions on who should pay for college. Many believe that parents are entirely responsible for the cost of their child's education. On the other side of the spectrum, some parents believe it is entirely the responsibility of their child to fund a college education.

I guess I fall somewhere in between. I want to be able to help my kids out some, but I believe the majority of the expense should be on their shoulders.

I would rather help my kids make money and pay for it themselves. Besides, I think it will mean a lot more to them and they will do better in college if they pay for most of their own education.

Cost of College

How much will it cost to go to college?

The cost of going to college increases at about twice the rate of inflation. The New York Times reported in December of 2008 that in 25 years from 1982 until 2007 that college tuition and fees increased nearly three times as much as the median family income.

What this means is that it is even harder for students to pay for college now than in the past even when taking inflation and incomes into account. The trend for the future looks to be the same.

According to the College Board, average prices for college tuition and fees in the 2009-2010 Academic year are as follows:

• Private four-year $26,273 (up 4.4 percent from last year)
• Public four-year $7,020 (up 6.5 percent from last year)

The average total 1-year cost at an in-state public college was $15,213 for the 2009-2010 school year.

Considering that the average student at a four-year-college takes nearly five years to complete their degree, the total cost for a student enrolled as a freshman in the 2009 school year, could come in at $86,617. This assumes that tuition and fees continue to increase at 6.5% and all other expenses increase at the inflation rate of 3%.

It is time to start teaching kids about saving money!

College Savings Fund Ideas

Planning for and having a college savings fund early in life is critical!

Here are some options and recommendations to be able to afford college in the United States:

• Do well in academics and get a scholarship to help cover college costs. Do not count on this entirely in case things do not work out.
• Get an athletic scholarship if possible. I know of a family that have started their young daughters taking tennis lessons because they figure that is their best opportunity for an athletic scholarship. Have a backup plan in case this does not work out.
• Consider starting a 529 Savings Plan. Different states have different plans, but many times your home state offers special incentives to in-state residents.
• Consider using a Coverdell account as a vehicle to college savings.
• Also consider using your Roth IRA as a college savings vehicle.
• Look into getting financial aid.
• Help teach your kids early about the costs of college and money management so they know what to expect.
• Seriously consider in-state colleges prior to going out of state. Differences in tuition are huge.
• Graduate on time or early. Colleges will probably charge the same tuition for 12 credits as they will for 20 credits. Try not to stretch graduation past your original goal. Not only will you be spending less on tuition and fees, but you will also be able to start your career earlier and start making money sooner.
• Set financial goals, both long-term and short-term to be able to achieve your college dream.

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