By Jesús Hernández Mejía, October guest blogger
How do I pay for college? This is the question that is most often asked when students apply to a postsecondary institution. The typical answer is, “you can get financial aid.” For some students that might well be the case but for others it is not. In some instances, even with financial aid, students are faced with stark decisions of giving up the college of their choice and enrolling in a more affordable institution, taking lots of student loans, or giving up on college altogether.
There are several steps that can be taken and many ways to accomplish the dream of a college education. One of the first steps is to start saving. View a short video about saving from the new Paying for College series. (There’s also a 16-minute video, Paying for College in Spanish.)
As an assistant dean of financial aid, I often meet with parents who did not plan for the reality of their student going to college. It’s as if it came to them as an afterthought when their student burst through the door one day and said, “Mom, Dad, I want to go to college!”
The panic on their faces and the awkward conversation that follows is understandable. College is something that we really need to start planning for as soon as we start thinking about having kids — and continues until the day they graduate. Yes, you read that correctly.
Planning for college is essential and there are a variety of tools (see the MassMutual Financial Group resources) that can be used to predict the future of college costs. For example, a child born in 2013 will expect to pay $30,627 in 2029 at a public institution and $67,767 at a private institution.
If you are betting on your future student using government financial aid to pay for college, keep in mind that it will still exist in some shape or form, but it might not resemble what it currently looks like.
So it’s important to start saving now. Here’s a hypothetical example from MassMutual: save $50 per month on a savings plan for 18 years and you would end up with $12,339. This assumes a 6% earning rate. Even if you don’t put that money on a savings plan, $50 per month for 18 years gives you $10,800 or about a third of the cost for the first year. Obviously, the more you save, the more money that your student will have to pay for school.
I know you have a life and saving a lot of money might not be convenient or possible. After all, you are also thinking about buying a house or paying for rent, purchasing a vehicle to get to work, vacations and many other things. But think of the advantages that your student will have: less debt in loans after graduation and more time to start thinking about college for their own children.
Watch for my next blog post to learn about other ways to truly make college an affordable option.
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