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Financing Your Child's Education

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Presentation on theme: "Financing Your Child's Education"— Presentation transcript:

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


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