Paying for college is one of the biggest expenses for parents and/or grandparents. With a sound financial plan, it doesn’t have to impede your retirement. There are options to paying for college, but they are not all a “one size fits all”.
Recently, I was interviewed by a Wall Street Journal reporter. His main question was “tell me how you helped your client pay for his grandchildren’s college education”. Now the back story, the client is a lovely 70-year old couple who have approximately $1,000,000 investible between the two of them. They have 5 grandchildren, ages 14 to 25. They have already paid for the first grandchild’s college education. They promised their 4 remaining grandchildren they would pay for their college education. The 2nd oldest is now 18 and applying to my alma mater, Boston University.The cost of college each year at this private university (room and board, plus education) is $50,000 per year, times 4 years. Thus, if the last four grandchildren go to private universities, the grandparents would have to pay $800,000! That is $50,000 per year for 4 years for 4 grandchildren. Crazy! “How to pay for it” was the big question. When the Wall Street Journal article is published you will see the answer. But, for now let’s discuss alternative ways of paying for college education.
Financial Planning Decisions:
Financial Aid – colleges base their financial aid depending on how much a family can afford. Not all families qualify for financial aid.
Grants & Scholarships – grants and scholarships provide students with money that doesn’t have to be paid back. Each grant and scholarship is set up with its own guidelines and some may be based on financial need. There are many grants and scholarships available across the country; you just have to know where to look for them. There are many websites, but be aware of scams. The Community Foundation for Palm Beach and Martin Counties puts out a Scholarship Directory every year and is a good resource. Click here to go to their website.
College Savings Plans (529) – a 529 Plan is an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. In Florida, we have the Florida Prepaid College Plans – click here to go to their website. Almost every state offers 529 plans.
These are just a few ways to pay for college and there are more. Before deciding how you and your family plan to pay for college, I recommend doing your research and sitting down with your financial advisor to come up with a plan that best suits you and your family. There is also a great article on this topic on Forbes website by writer William Baldwin – click here for that article.
If you are planning on paying for your children or grandchildren’s college education, call me to discuss the options so you can still have a comfortable retirement.
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