College | December 16, 2020 | Jenn Ruiz
Planning for college can be an exciting (or overwhelming) time for families. For some who may not consider themselves “planners,” the mere thought of how to start laying out the financial groundwork can feel daunting.
While choosing the right college or university can be a pivotal moment, determining the most affordable (and responsible) way to pay for it is equally important.
According to research from Sallie Mae and Ipsos, “Higher Ambitions: How America Plans for Post-secondary Education,” 84% of families believe creating a plan for college is challenging, but planners are 3x as likely to be confident about meeting the cost of higher education.
Planners Vs. Non Planners
Planners are significantly more likely than non-planners to be saving for the student’s higher education (73% vs 19%, respectively) and, among those who have saved, planners have saved nearly twice as much, an average of $28,389, compared to non-planners, $14,999.
Research also found that planners are more likely to say they always knew the student would continue his/her education (46% compared to 38% of non-planners). Nearly half of planners (48%) say they started saving for the student’s education when the student was six or younger.
So, while families benefit from putting a plan together, the question remains: how do you start?
Here are some easy tips and tools to help put the planning process in motion:
Frequent and honest family conversations are key to the college planning process. In fact, 90% of families report having had the “college talk”. These discussions can include setting expectations on how much college costs, the various expenses associated with college, and who will pay for it.
To help break the ice, here are some questions that can help drive the conversation:
There are tons of great resources out there to help you and your family plan for college. Here are a few of my personal favorites:
1. Nitro by Sallie Mae
Finally! You can track all your college finances in ONE place. Find your combo of scholarships, savings, financial aid, and loans to make your plan to pay for college.
No purchase necessary. Void where prohibited. Odds of winning depend on number of entries received. Ends 12/31/2023. See Official Rules.
2. College Cost Calculator
While the cost of going to college may generally continue to rise, there are tools to help you estimate future costs, like this College Cost Calculator. This will help you have the talk about college costs early with your children, keeping a healthy expectation of what costs might look like down the road.
3. Countdown to College Checklist
In addition to putting a financial plan in place, there are other things to keep track of when planning for college. The Countdown to College Checklist is an easy and stress-free way to help your entire family stay on top of important dates and deadlines during the college research and application process. The checklist begins with to-dos for your junior year of high school, all the way through to the end of senior year.
Academic programs, location, financial aid packages, sports, campus, and class – these are just some of the factors that may come into play when narrowing your student’s list of potential schools.
Of families who have started talking about college, 63% have discussed the student’s top schools of choice. So, hear your student out and be sure to find out what’s most important to them, and, if you’re a part of the selection decision, be clear about what’s most important to you.
Did you know that family income and savings cover more than half (52%) of college costs? It’s true! And if you’re wondering what some of the best college saving options, here are a few suggestions.
One of the most common college savings accounts is a 529 plan. In fact, more than a third of parents (37%) used a college savings account, like a 529, to help pay for college, up from 21% in 2018-19.
529 plans are a popular option for families because they offer tax-deferred growth and tax-free withdrawals (if savings are used for qualified education expenses). Qualified education expenses include tuition, certain room and board expenses, fees, and the cost of books, supplies, and equipment. These plans also offer more generous annual contribution limits for savers which can in turn help you save what you need to make college happen! On average, families who used 529 plans saved $25,038.
Other common strategies to save for college are non-specialty accounts such as checking accounts, CDs, U.S. savings bonds, and noninstitutional savings.
While many of these savings tactics are a great way to get started, be sure to do your homework to find out which option will best suit your families’ college needs.
Don’t forget about resources like scholarships, grants, and financial aid, which can help cover costs associated with higher education. Apply for them early (and often), so you don’t miss out on any free money!
Remember, planning for college is an exciting time, and putting a plan in place early will help your family maximize every dollar while creating a positive experience for your student.