Planning for College

With college costs increasing at twice the rate of inflation each year, most American families now intentionally view a college savings plan as a fiscal necessity, not an option. Today’s low cost four-year college will be $60,000 or more and a private school education will be $160,000. If you compound today’s price by the 8 percent amount that tuition has increased annually in the last 25 years, by 2023 your first grader will be paying $100,000 per year for education at a public institution (The College Board, Trends 2010).

The future holds more for college graduates
A college education is still worth every penny. Studies show that college graduates make, on average, about a million dollars more over a lifetime than someone with only a high school education. And there is more good news: very few students will pay the full sticker price of their education. More than $15 billion in financial aid is offered each year from federal and state governments, private organizations, and institutions themselves. Some sort of financial aid is in place for more than 60 percent at public colleges versus 70 percent at private schools.

How can you qualify for this money?
The first step is to find out how much you are expected to contribute to the overall cost of education. Fill out the Free Application for Federal Student Aid (FASFA). Though it is a process to fill out—you will need a number of personal financial documents in order to complete it—the effort is necessary because the FASFA is used to apply for federal and state loans and grants. The FASFA can be filled out online (, and is what schools will use to offer financial aid packages that consist of grants, loans and work-study. Many worry that they will not be able to pay for their children’s college education without getting mired in debt, but the key to avoiding that scenario is planning. Be willing to put in the time to research the many education savings plans, grants, scholarships and loans available. (

What are the best options to save for college education?

1) 529 Plans –
Many believe the 529 college savings plan to be one of the best ways to save for college costs. Named for the part of the federal tax code created in 1996, it allowed a parent to open a tax-deferred savings plan and any withdrawals are completely tax-free if used to pay for a beneficiary’s college tuition, fees, books, supplies and room and board (if the student is enrolled at least half time). Start when your child is young, as this will provide many more years of savings growth and compounded interest. See my e-mail below to request The Top 10 Things Everyone Should Know About 529 Plans.

2) Florida Prepaid College Plan –
The Florida prepaid plan allows you to make a monthly payment or lump sum toward future tuition and room and board college costs. It does this at today’s rates to cover future costs. You can visit the website above to enter your child’s age and the plan you want to prepay to calculate the monthly or lump sum amount for your family. The advantage of this plan is that as long as you make all the payments, the tuition will be covered regardless of future costs. This plan applies to state and local colleges only.

Next to retirement, college planning is one of the most serious aspects of financial planning, because it influences a young adult’s total lifetime earnings. There are numerous other creative ways to plan for, pay for and create great cost savings as you prepare and complete a college education. Please e-mail me to request the informative publication The Top 10 Things Everyone Should Know About 529 Plans.

Jeffery Masters, President of Jeffery W. Masters & Associates
Securities offered through LPL Financial, member FINRA/SIPC
Investment Advise offered through Independent Financial Partners,  a Registered Investment Advisor. Independent Financial Partners and Jeffery W. Masters & Associates are not affiliated with LPL Financial.
Jeff is a Locally Endorsed Investment Advisor by Dave Ramsey. Email Jeff at: [email protected].

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