Investment in a college education is approaching an average of $200,000 for four years of private college tuition, room and board and other associated expenses according to The College Board. College tuition rates are growing at an average of 8% per year, which is much higher than the general inflation rate. It has long been a part of the American dream to provide a college education for their children. However there are growing concerns about how well and at what cost higher education is preparing graduates for the job market.
So how can families get their educational money’s worth? One way is to address ways to reduce college costs. Secondly, choose the most cost effective means of saving for college costs. Finally choosing a college major deserves close attention due to its impact on career outcomes.
Addressing ways to reduce costs is important so as not to leave any opportunities uncovered. Last year more than $2.9 billion in available federal Pell Grant money was not used because families did not apply. Unlike student loans, grants require no repayment. Do your research since many companies and other organizations offer merit based scholarships. High school students working for college credit is another way to get ahead of costs by chopping off time of college attendance.
Growing in popularity is attending community college for the first two years and then transferring to a four year college. Tuition can run a 33% to 50% less than at a four year institution. Room and board costs are rising drastically as well. Living at home can save money too. Another option is review online courses offered by major accredited universities. It is also important to consider that college may simply not be for all kids.
It is never too soon to start saving for college. We work with our clients to set a realistic goal and then discuss the best vehicle to meet that goal. 529 college savings plan were created by Congress in 1996 and are specifically designed for education savings. 529 plans can be used for tuition, room and board, books and computers. 529 plans are investment programs designed with one basic purpose in mind — providing families with an easy and effective means to save for future college costs. They also have tax, retirement, and estate planning implications that extend far beyond this basic purpose. Unlike most other tax advantaged programs, 529 plans are open to everyone, regardless of income level or age of children or grandchildren. You do not even need to have children or grandchildren— you can establish an account for your favorite niece, or with some plans, yourself.
The question of how college majors shape educational and career outcomes should be discussed with your children entering college. A recent report from Georgetown University’s Center on Education and the Workforce showed that majors in STEM (science, technology, engineering and mathematics) fields tend to have the higher earnings, both as entry level employees and later in their careers. Of course, prospective earnings are not the only consideration in choosing a major, since being interested in the subject is essential. Consideration must also be given to how a target career field may be evolving.
In the end, only job seekers, who understand what has to be done and diligently perform the preparatory steps, as they go through college, and even when they get out, can hope to improve their chances for job hunting success. If your student has just started in college remind them that they cannot wait until their senior year of college to try to do the things that should have been done in earlier years and expect to receive a great job offer.
The top priority of someone seeking a job should be to package and present themselves in the best possible light, within the field where they can make their greatest contribution. If the job seeker does not know much about that field and has not undertaken the intense work required to network effectively and gather the right kind of information, he or she will be beaten out by someone who has.
The fact remains that employers offer good jobs to the students who have earned them. College graduates earn those jobs with a long series of actions, successes and accomplishments in the classroom, on campus, at work, in the community and in leisure activities. They give their target employers exactly what they need and want. To do this, a student's preparation must be well-planned, methodical, and comprehensive and based on the employer needs and expectations. It is with this preparation that families will hopefully get their money’s worth. Contact us, we can help your family put together a plan that meet your objectives in funding a college education.