With the continued increase in tuition at the majority of private and state colleges, many families have to make some tough decisions about how to pay for continued education. Undoubtedly a college education will pay off in the long run with earnings potential being up to a million dollars or more over a lifetime compared to someone who does not have a college degree.
Job loss, higher cost of living and increased single parent family headed households are some of the factors that are creating a shift in thinking about whose responsibility it is to pay for college. Many parents are saying that eighteen years of footing the bill is enough and the now adult (18 year old) children need to figure out a way to pay for college on their own. The escalating costs of college are another major concern for parents. According to the College Board:
The Average College Tuition and Fees for 2005-06 versus 2004-05
• At four-year private nonprofit institutions, tuition and fees average $1,190 more than last year ($21,235 versus $20,045, a 5.9 percent increase). Total charges average $29,026 ($1,561 more than last year’s $27,465, a 5.7 percent increase).
• At four-year public institutions, tuition and fees average $365 more than last year ($5,491 versus $5,126, a 7.1 percent increase). Total charges average $12,127 ($751 more than last year’s $11,376, a 6.6 percent increase).
• At two-year public institutions, tuition and fees average $112 more than last year ($2,191 versus $2,079, a 5.4 percent increase).
The total charges include room and board and other expenses.
An emerging trend is parents paying early in the child’s life for a private school education, in the hope that they will be ahead of their peers and be able to obtain scholarships and grants to attend a college of their choice. Some of these parents are taking out education loans in elementary school through high school to help achieve this goal.
Whatever your financial situation, be sure to communicate with your children the ability to pay all or some of the costs of college. If necessary, some children can work during the summer high school years to help pay for their college. Attending a local community college for a year or two to help save for that Ivy league school that is really the desired educational institution, might be a smart option as well. Don’t forget loans, scholarships and grants as an option to help offset the costs. The current interest rate for Federal loans is 6.8% and might make payback of the loan difficult for new graduates. You don’t necessarily want your child to start out on their own with a huge debt load.
Explore your options early, and determine what you believe you will be able to do to help your child with his or her continued education.