College planning for your child or loved one begins long before he or she graduates high school. Whether your student is in elementary, middle, or high school, you should start planning now to ensure your student can have a complete college education without having to spend a fortune. The Pennsylvania Institute of Certified Public Accountants (PICPA) offers some tips to consider that will help cut future college costs that can factor into short- and long-term college savings plans.
Start at a Community College
You and your child may be hoping that he or she graduates with a diploma from a prestigious (and very expensive) college. If so, that goal may be more achievable if the student starts out at a community college and then transfers to his or her top-choice school after earning an associate’s degree. Community colleges are generally very affordable, which can help you stretch your education budget and make it easier to pay for the last two years at a costlier school. To ensure this plan works, confirm that the college to which your student will transfer will grant full credit for the courses he or she takes at the community college. Your student should also be sure to take all the right prerequisites for the classes necessary for his or her intended major and any other graduation requirements.
Accelerate the Process
There’s no rule that says college has to last four years. Your student can aim to finish in less than that. It’s often possible to get a jump on graduation simply by taking college credit courses in high school. This can cut down on tuition, as well as living, transportation, and other associated expenses. Graduating sooner also means your student can begin earning an income sooner.
Stay in State
Going to a public university in your home state is typically much less expensive than going to a private or out-of-state public university. If the in-state public college isn’t your student’s dream school, remind him or her of the value of graduating with no (or lower) student loans and the impact it can have on a post-college budget. It may help make the in-state school more appealing.
Wait for All the Financial Aid Packages
Review the financial aid packages for all the schools your student has been accepted to before making the final decision. This way you can choose the school with the lowest costs. In some cases, the net cost of the private schools may come close to the cost of the public universities after the aid packages are considered.
Anticipate Possible Tuition Hikes
In-state tuition and fees at public four-year institutions rose 3.2 percent per year beyond inflation during the last decade, and 2.4 percent at private nonprofit four-year institutions, according to the College Board. That means you should factor in the possibility that the tuition you pay during your first year may rise steadily each year. Research the recent history of tuition increases at your top choices, and determine whether you’ll be able to afford the highest rate you may have to pay once your student gets to senior year. If your student is already in school and faced with a tuition hike, find out whether the higher cost qualifies your family for more financial aid. Summer or campus jobs are other ways to cover a spike in tuition.
Manage Student Loan Money Wisely
Some students may be tempted to borrow the maximum amount of money possible, but student loans should only be used for needs, not wants. Your student shouldn’t borrow money and then spend it on weekend entertainment and spring break trips. If your student does borrow more than needed, have them save that money and borrow less the next year. This will help reduce the amount of their outstanding loan balance, so there’s less debt hanging over their head after graduation. Remind them that the smaller their loan balance, the less interest they’ll have to pay over time. Check out these four tips for more information on taking out a student loan.
Your CPA Can Help
These are just a few of the options that your CPA can help you examine as part of your college planning. Turn to your local CPA with questions about paying for college or any other financial concern. To find a CPA in your area or for more financial tips, visit www.picpa.org/moneyandlife.