Friday, September 21, 2012

Your Money: Saving for College


Is a college education still a good financial investment? According to USA Today’s Country Financial survey of 3000 adults 18 and older:
Year             Yes              No
2008           81%            19%
2009           79%            21%
2010           64%            36%
2012           57%            43%

As a result of the rising costs of college tuition and fees, many prospective college students are doomed to borrow big bucks to help fund their college education. Did you know there is a way for college students to avoid a life of big college bills and college collector’s calls? In the past, a bachelor’s degree was a guarantee of success – the only credential needed to obtain a good job, a promotion, a raise, or employer provided health and dental insurance. In today’s economy, a bachelor’s degree guarantees scary debt and a life of financial struggles especially when funded solely by loans.

Consequently, the answer is for students to find other ways to pay for college (part time work, savings plans, savings bonds, long term investments), reduce college tuition cost by choosing to attend in state colleges, and borrow no more than $5000 a year to help defer college costs. 

Did you know the average cost for 4 years at Rutgers: The State University in New Jersey is about $80,000? Conversely, 2 years at Middlesex County College in New Jersey is $20,000 for out of county residents and $10,000 for in county residents. So let’s do the math. A student who decides to attend a New Jersey County College for 2 years ($20,000 in county) and then transfers to a 4 year college in New Jersey ($40,000) will have a college expense of $60,000 upon graduation. The savings of $20,000 over four years is quite significant, especially since $20,000 is the lowest recommended loan amount each college student should borrow to pay for college. Student loan debt of $20,000 should be payable by most students over 10 years.

But what if students cut their costs, work part time (no more than 15 hours a week during the school year), borrow modestly, and they still need more money for college? How much more money should they borrow without ruining their lives and credit? The key is to match student loan debt with expected income after graduation. For example, future musicians should borrow much less than future physicians. 

In the end, the decision to attend college is a very personal decision. Of course there are many factors families and individuals have to weigh before submitting those college applications. I hope this information was helpful. If you know a family about to send a child/children to college, pay it forward and pass it on. Knowledge is power! Here we go!!!

Here is a list of college resources:



Federal Student Aid: http://www.fafsa.ed.gov/



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