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Things to Consider When Planning for Your Child's College Education

Providing children with a college education is frequently a financial planning priority. When your kids are young, you have many college savings options. If your children are older, helping them pay for college may be your primary financial concern.

A person’s ability to earn an income is likely his most significant financial asset. A college education plays a major role in the amount of money earned throughout a lifetime. People with a bachelor’s degree or higher earn on average over two times more than those with a high school education alone. The table here, taken from the Statistical Abstract of the United States, 2007, table 684, shows annual median incomes for college graduates and non-graduates.

Gender High School Graduate Bachelor’s Degree or More
Men $38,331 $81,007
Women $27,956 $53,215

The cost of a college education today can easily equal the price of a median family home, but the payments are due and payable over only four years. The critical role of a college education and the skyrocketing costs make planning for college essential.

Now the question is what type of college education may be appropriate for your child? The type of schooling greatly affects the cost of the education. Average college costs range from about $2,200 per year for a two-year community college to more than $22,000 per year for a four-year private institution.

Here are your primary options:

  • Vocational or technical school: The average cost for a one-year training program at a public vocational or technical school is $3,000 to $5,000.

  • Community college: Tuition and books at community (also known as junior) colleges average about $2,200 per year. More than 40 percent of students attending community colleges receive grants and tax benefits that nearly pay for their educations. In fact, more then 60 percent of all full-time college students receive grants to help offset the costs of their educations. The key word here is help!

  • State university: The average annual expense for a four-year public university is about $6,000.

  • Private college or university: Private institutions cost about $22,000 per year on average.

  • Combination: If you’re looking for a way to reduce the total cost of your child’s college education, but still enable him to attend the college of choice, one way to keep the cost down is for him to attend community college before heading off to the university. Your child can live at home and attend community college for the first two years and then transfer to a university to earn a bachelor’s degree. The diploma only shows from where someone graduated, not how he got there.

More than half of the students enrolled at four-year colleges attend institutions that charge tuition and fees between $3,000 and $6,000 per year.

You (or your child) may have your heart set on him attending your alma mater or a certain type of institution. However, in the grand scheme of things, obtaining a college degree is much more important than which college awards that degree. Another important fact to consider is that the overwhelming majority of Americans aren’t working in the field that they studied in college. So, unless your young scholar is at the top echelon of the academic scale, where he attends college has little to do with his opportunities and earning potential in the future.

For now, presume that your child will be attending college of some sort and you would like to help pay for college costs. Essentially, a college education can be paid for in one of four ways (or a combination of them):

  • Save money in advance.

  • Pay as you go.

  • Borrow from federal student loan programs or private sources.

  • Check to see whether your child qualifies for some sort of financial aid.

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