1. Financing Your Child's Education
Jennifer Abel
Extension Agent
Virginia Cooperative Extension
4/30/2019
Family Financial Freedom Series

2. Family Financial Freedom Series
Objectives
Appreciate the challenge of paying for college
Understand resources and programs available to help
Commit to accumulating knowledge and assets for financing your child’s higher education NOW
4/30/2019
Family Financial Freedom Series

3. Family Financial Freedom Series
Agenda
First Principles
College Financing Alternatives
Formula for Success
Pitfalls to Avoid
Question and Answers
4/30/2019
Family Financial Freedom Series

4. First Principles --the BAD news
College is expensive
Many Costs: Tuition, Fees, Room & Board, Transportation, Books…..
Example: for a child now in 4th grade, starting college in 2010, the estimated total cost will be….
Public school: over $79000
Private school: over $ (source: T. Rowe Price)
Costs rising faster than inflation
Many parents are overwhelmed by the figures
4/30/2019
Family Financial Freedom Series

5. Examples (T. Rowe Price, 2000)
Exhibit A: Projected Total Four Year Costs of Attending College
                                                                                                                                                                          
Years Until Student Begins College
School Year (Fall)
Public College
Private College
Savings Factor (8%)
Monthly Investment Factor 1
2001
$51,312
$112,896
1.08
  12.53 2
2002
  53,877
  118,541
1.17
  26.11 3
2003
  56,571
  124,468
1.26
  40.81 4
2004
  59,400
  130,692
1.36
  56.73 5
2005
  62,370
  137,226
1.47
  73.97 6
2006
  65,488
  144,088
1.59
  92.64 7
2007
  68,762
  151,292
1.71
112.86 8
2008
  72,201
 158,857
1.85
134.76 9
2009
  75,811
  166,799
2.00
158.48 10
2010
  79,601
  175,139
2.16
184.17 11
2011
  83,581
  183,896
2.33
211.98 12
2012
  87,760
  193,091
2.52
242.11 13
2013
  92,148
  202,746
2.72
274.74 14
2014
  96,756
  212,883
2.94
310.08 15
2015
101,593
  223,527
3.17
348.35 16
2016
106,673
  234,704
3.43
389.79 17
2017
112,007
  246,439
3.70
434.68 18
2018
117,607
  258,761
4.00
483.29
4/30/2019
Family Financial Freedom Series

6. First Principles: the GOOD news
At least some Financial Aid is often available, particularly if you take the necessary steps
If you start planning now, you can accumulate quite a bit by the time the child enters college
If you are creative, the costs can be significantly lower than the averages just stated
4/30/2019
Family Financial Freedom Series

7. College Financing Alternatives
A variety of sources of help
Look at both resources AND costs
Piece together total solution
Military
Co-op
Cost Savings
Work
Loans
Invest-ments
Scholar-ships
Savings
Grants
4/30/2019
Family Financial Freedom Series

8. Family Financial Freedom Series
Spectrum of resources
Grants/Scholarships
College Loans
Savings
Most Desirable
Work options
Less Desirable
Investments
Gifts
Other Loans
529 plans
See handout for details
4/30/2019
Family Financial Freedom Series

9. Cost Reduction Strategies
In-State Public vs. Out of State/Private School
Community College for portion of degree
Have student live at home
Take higher credit load and graduate faster
Buy used textbooks and computers ……
4/30/2019
Family Financial Freedom Series

10. Family Financial Freedom Series
Formula for Success
Start saving and investing NOW
Identify appropriate approach
Program type (e.g. 529 plan, UTGA)
Investment type (e.g. stocks, savings bonds)
The longer the time period, the LESS risky stocks and bonds are as an investment for college
BUT, reduce exposure as college gets closer
Consider cost reduction strategies
4/30/2019
Family Financial Freedom Series

11. Family Financial Freedom Series
Pitfalls to Avoid
Doing nothing
Time will become your enemy, not your friend
Assuming that substantial aid will be available
Can’t predict the future landscape
Scholarship scams
If it seems too good to be true, it probably is
4/30/2019
Family Financial Freedom Series

12. Family Financial Freedom Series
Summary
You can make substantial progress towards realizing your dreams for your child’s future!
There are lots of resources and creative strategies to be explored
Start planning, educating yourself, and saving/investing NOW
4/30/2019
Family Financial Freedom Series

13. Where to Get More Information
See handout
VA Cooperative Extension Financial Counseling Program
For goal setting and further exploration of alternatives
Many other resources on Internet
High school guidance/career offices
For info on financial aid application process, forms, etc.
Financial planning professionals
For specific investment advice
4/30/2019
Family Financial Freedom Series

14. Family Financial Freedom Series
Questions and Answers
On presentation?
On handout materials?
On your personal situation?
4/30/2019
Family Financial Freedom Series