What’s Your Family’s Plan to Pay for College?
I recently asked my three children, who are now out of college and working adults, if they were happy with their college education. Their answer was a resounding, “yes." Their answer was partially driven by the fact that since we started planning early, they were not carrying debt for their education upon graduation. The cost of a college education is expensive and college costs are expected to rise 5% a year.1 For an 18-year-old, the estimated cost of attending a private college (tuition, fees, room and board) is $262,573, and for a newborn, the projected cost is $631,913.1 These numbers are staggering and planning for these costs should be a family affair. These days, many parents are having children later in life, which means that retirement planning and college funding can collide and become competing priorities. The good news is there are many strategies for mitigating the high cost of college if addressed early.
Did you know you can start a 529 plan in your name as both the account owner and beneficiary prior to having children? When you have a child, you can change the beneficiary once they have a social security number. Getting a head start on saving can make a big difference as the money in a 529 plan grows tax free if used for educational purposes. Depending on what state plan you use, you may also be able to take a state tax deduction for your contributions.
One resource that everyone should be aware of is the FAFSA (Free Application for Federal Student Aid) managed by the Department of Education. Because FAFSA’s eligibility rules change yearly, make sure you have the most up-to-date information. Regardless of your finances, every family should submit a form beginning in the fall, a year prior to the start of freshman year in college because individual colleges use this form and information to provide financial aid in different forms, including loans and scholarships.
I am a big proponent of talking to your children about their thoughts and goals regarding college as early as middle school. Depending on your family’s circumstances, having your kids participate by taking AP (Advanced Placement) classes in high school (which generally provide college credit without the cost!), researching ways to get scholarship money in the future, and even getting a part-time job can contribute towards covering the cost. As parents, we need to communicate to our children our expectations as well as our limitations. There is nothing worse than a high school junior learning that the Ivy School they have their mind set on is financially out of reach.
There are many other ways to mitigate the rising cost of college. I have only touched on a few strategies and if you have questions, feel free to reach out.
1JP Morgan Asset Management, using College Board’s Trends in College Pricing and Student Aid2025. Future college costs estimated to inflate 5% per year, based on average tuition, fees, room and board for 2025-2026. https://am.jpmorgan.com/us/en/asset-management/adv/investment-strategies/college-planning-essentials/viewer/college-costs/cpe-ccfuturecost/
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