Real Estate Developer and CEO of Operation Benjamin Shalom Lamm is a huge believer in planning now for developments in the future. And in the USA and many parts of the world, providing a viable future for your children means planning now for their college tuition plans.
This is why Lamm joins thousands of college planners as well as financial planners to consider college tuition planning early.
No later than around the 6th grade, parents should have a gut-check moment and educate themselves about just how much college tuition, including living in a dorm room and meals will cost their student.
For a lucky few, the actual costs may be less than what parents imagined. But for the vast majority of parents, this will be a real sticker shock moment.
Parents who do their due diligence will discover the average US public university, including tuition, room and board, will cost nearly $21.000 per year, and the average private college is around $47.000 per year.
Of course, there are much cheaper schools, but they are not generally a bargain as the average 4-year graduation rate for many of these “bargain schools” is well below 5 percent. By comparison, the University of California at Los Angeles has a 4-year graduation rate of 75 percent.
So Once Parents Discover the Price of Education, How Can They Go About Making College Tuition Cheaper?
Shalom Lamm believes that one way is to make a compromise and have their student live at home and go to a local community college for the first two years, then transfer.
According to Education data, the average cost of an in-district community college is a little over $3.740, which means spending two years at a community college will typically save up to $34,000 in expenses if your child attends two years at a community college before transferring.
And in case you are wondering about future employers, place no weight on hiring someone who spent 2 years of community college before transferring to a 4-year college.
The next way is to discover whether your state offers a prepaid tuition plan for college. The way this works is that you begin to make payments now on the tuition at today’s rates, and then when your child graduates from high school, they can enter. The university is virtually free except for room and board.
However, there are only 13 states that offer prepaid tuition plans, Florida, Illinois, Maryland, Massachusetts, Michigan, Mississippi, Nevada, Pennsylvania, Tennessee, Virginia, Texas, and Washington, but these plans are certainly worth considering. And basically, you will get your money back if your child decides to go elsewhere for college.
In addition, all 50 states offer 529 plans. A 529 plan is similar to a Roth IRA in that you put after-tax money into a plan for college tuition and when you withdraw the funds, there is no tax involved.
The Bottom Line
Parents have many things to think about when deciding on how to help pay for their child’s college income. If your child has to borrow too much in student loans it can burden them for years. But the sooner you act, the more options you will have.