By Harold Simansky
Educational Investment Advisor
A college education may be the best investment a person can make, but it does come
at a steep price.The average cost today for four years at a private university
runs about $120,000 when you factor in tuition, room and board, and general
expenses. Even a public school education can cost about $50,000. And the shocking
fact is that these figures will seem like chicken feed for parents of a new baby.
The tab to put your child through an average four-year private college is likely
to be more than $250,000!
Don’t even entertain the hope that these numbers might magically drop in the years
ahead. They won’t. Wondering, then, how any but the most well-to-do can expect to
pay for their children’s education? Take heart! It really is within your means,
and we are going to show you how to do it.
To begin, here’s the most important advice anyone can give you: Start saving as soon
as possible. You’ll be sorry if you don’t. By starting on the day your baby is born,
you can cover a $250,000 college bill by saving $600 each month. If you wait until
she’s 10 years old, that sum ratchets up to $2,000 a month. And, amazing but true,
if you wait until she’s 16 — you will have to save an astronomical $10,000 a month
to catch up.
But wait — there is some good news. First of all: Financial aid is available. According
to the Department of Education, 63 percent of all undergraduates enrolled in 2003–04
received some type of financial aid, and this number keeps going up. At the same time,
it’s very important to be aware that the amount of assistance you receive is a product
of how you save. Part of this series will focus on the best way to save for college to
ensure you receive the financial aid you deserve.
Other good news: There are also many new and innovative programs to help families like
yours. Education savings assistance is now offered by multiple sources, from federal
and state governments to mutual fund companies to colleges themselves. In fact, as
you’ll discover, there are a bewildering number of possible paths to take. From 529
Plans to Coverdell Education Savings Accounts to Custodial Accounts. Even IRAs.
Parents who conduct even the slightest bit of research into the different plans can
expect to be bombarded with literature touting their merits – and in the end, you
still won’t know which one is best for you. It’s not an exaggeration to say that
you virtually need a college degree to figure out how to pay for one.
Pure and simple, the point of this series is to help you make sense of the many
choices out there and to point you toward the best way to save for your child’s
college education. More than anything else, you will learn you don’t need to be
a member of Bill Gates’ immediate family to pay for college. Yes, the costs are
high, but there are multiple plans and products to make college an achievable
goal for any family. In these articles you will learn what programs are available
and how to choose the right one for your particular situation.
If your baby is still in diapers, it’s an ideal time to begin planning and saving
for college. But even if your children are older, don’t believe for a minute that
it’s too late to plan. Some simple planning can go a long way in helping you
properly structure your investments to reduce your tax burden and maximize
financial aid. In this series, we will discuss how to do that.
We will also show you how to involve others in saving for your student’s education.
Right now there are some golden opportunities for grandparents to participate, and
possibly gain a tax break or reduce their estate taxes in the bargain.
Let’s get started!
About the Author
Harold Simansky is the founder of Educational Investments, LLC, (www.educationalinvestments.com
a Registered Investment Advisory firm focused on helping families save for
education. His book, College Costs How Much?! The Workbook to Help You Save for
, which explains the financial aid process, is available at
. You can send
him an e-mail at Harold@edinv.com