Save for your children’s college expenses

By Janene Hodges Gilman, University of Minnesota Extension

One of the last things any parent and student wants to hear is that college costs are raising. College tuition can be an overwhelming expense. The sooner you start preparing for it, the easier it will be when the time arrives. What are the benefits of higher education for your children? What are the real costs of getting a degree?

Parents and students receive many benefits from higher education, including increased earnings. Education Pays (2007), released a report stating that typical college graduates earn over 60 percent more than typical high school graduates during their life time. Students who receive advanced degrees will earn more than two to three times as much as high school graduates. Those with degrees are more likely than other employees to receive health benefits and pension plans. Students obtaining a degree are less likely to become unemployed, and less likely to live in poverty. Adults with higher levels of education have reported positive perception of personal health, healthier lifestyles and community involvement.

Trends in College Pricing (2007-2008), reports that tuition and fees constitute about two-thirds of the total budget for full-time students living on campus at private schools, averaging $35,374 per year, but only one third of the budget for in-state public four-year students, averaging $17,336 per year. The total budget for college includes tuition and fees, books and supplies, room and board, transportation, and miscellaneous expenses.

How much will college cost when your child heads to campus? Don’t forget to figure inflation in your amount. Most families pay for college through a combination of savings, a 529 plan, saving bonds, mutual funds, current income and borrowing. Beyond saving in advance, using other ways to pay for higher education include: financial aid from federal, state and local government; work study opportunities from your child’s college; loans; scholarships and grants; family gifts; and part-time student jobs. Take time to develop an educational plan today by researching all sources of payment available to your children in advance which may save you and them money in the future.

(Janene Hodges Gilman is family resource management educator with University of Minnesota Extension.)