Paying for the High Cost of Higher Education: Here Are Five Surefire Ways Parents Can Reduce Their Children's Rising College Expenses
Brown, Carolyn H., Black Enterprise
BRENDA AND MIKE LIPSCOMB RELOCATED FROM New Jersey to Maryland in 2007 for better employment opportunities. In 2008, the couple moved again, this time to northern Virginia for better post-high school educational opportunities for their sons, Michael, 16, and Miles, 12.
"We moved to Virginia primarily because our oldest son wants to attend Virginia Tech. He has his heart set on that school," says Mike, a plant manager at Science Applications International Corporation (SAIC) in Sterling, Virginia. Brenda, a sales manager for Daiichi Sankyo Co. Ltd., adds, "When we were looking at living in Maryland and Virginia, Maryland didn't have a lot of options. Virginia has so many schools."
At today's tuition rate, the couple figures they'll need $80,000 to pay for a four-year public education. The total cost for one year for in-state students is estimated at $17,365 compared with $31,336 for out-of-state students.
The Lipscombs have been aggressively saving since Michael was in third grade, initially investing in a mutual fund set up as a custodial account. When he was in the sixth grade, they opened a 529 college savings account, contributing $250 each month. Miles also has a 529 plan that the couple contributes $100 to each month.
"I have told both of my sons that there is no free ride," says Mike. "I call it the Lipscomb scholarship in terms of providing for their college education. I expect them to get no less than a 3.5 grade point average when they come out of high school."
Another great expectation is that their sons will bear some responsibility. "We want them to contribute a small part to their college education costs, around 20%," says Brenda. So, if $80,000 is the target number, they will have to come up with $16,000.
The Lipscombs were fortunate to not be saddled with college student loan debt upon graduation thanks to academic scholarships they both received. The couple can also save for their sons' college expenses because they live modestly: they don't have to finance any car loans or credit card debts.
As with many parents, the Lipscombs still fear that skyrocketing costs will make their sons' college educations unaffordable when it comes time to enroll. With today's tough economy, the average American family may not be able to save enough money to cover a four-year college education, says Rich Polimeni, director of education savings at Bank of America Merrill Lynch. "But there are a couple of things that parents can to do to lessen that blow a bit." 24--Carolyn M. Brown
Here are five ways to reduce college costs:
Select a state college or university. You don't have to move to another state, but consider sending your child to a local institution. A four-year, out-of-state public school can cost almost double an in-state school's tuition and fees. You can lower expenses even further if your child continues living at home. Consider the option of having them attend an in-state school for the first two years and then transferring if they must attend an out-of-state institution, says Polimeni. …