Breathe. College can be paid for, and help is available.
When it comes to planning for college, “It’s definitely never too early,” says Joan Jurek, director of college planning for the Omaha office of EducationQuest, a private, nonprofit organization with a mission to improve access to higher education in Nebraska. “Families should start saving as much as they can for college when their child is young.”
For some families, planning for future college expenses may begin as soon as a child is born. This is the optimum time, as putting away $100 per month when a child is less than 1 year old could result in $20,000-$30,000, average, by age 18, depending on the plan.
The myriad possibilities include Coverdell education savings accounts (CESAs), IRAs, custodial accounts, and various investments like savings bonds, mutual funds, money market accounts, and CDs. Professional financial planners and advisers can present the pros and cons for each option. Ample information is also available online.
A 529 Plan is a simple option designed to help families set aside funds for future college costs, says Deborah Goodkin, managing director of savings plans with First National Bank of Omaha. First National Bank is Nebraska’s Educational Savings Trust (NEST) 529 program manager.
On the other hand, not every family can afford to start a college savings plan when their child is born. “It’s also never too late,” Jurek says.
“There’s no wrong time to start; just start when you can,” Goodkin says, adding that not only can any family member start a plan for a child, the NEST system also makes it possible to invite other family members to contribute.
“Whoever opens up the plan is saving for a child’s dream,” she says. “Statistics have shown that kids who know that there is a college account set up in their name are more likely to do well in school and do well in college. You’re setting the expectation for your family member to go to college and do well and think about their career.”
Parents can start saving for college, but at some point, the student will need to become involved in the planning process. This ideally starts in eighth grade, Jurek says.
“This will give them time to make sure the student takes coursework throughout high school to ensure college admission, explore career interests, and research colleges that fit those interests,” she explains. Families can then begin to more specifically assess costs associated with their student’s institutions of interest against available funds.
“The junior year is especially important, as that is when students should narrow their college choices and understand financial aid options. They can do this by attending a financial aid program, going on campus visits, and attending college fairs,” Jurek says. “This will prepare them to apply for college and federal financial aid early in the fall of their senior year.”
One thing parents should not bank on—college scholarships, especially sports scholarships. Only about 2 percent of students receive a full-ride Division I sports scholarship. Further, those full-ride scholarships are only available to boys in men’s football and basketball, and to girls in women’s basketball, gymnastics, volleyball, and tennis. Got a young Alex Gordon? Don’t expect a scholarship to cover the costs of college. That’s because in baseball, like many sports, the team’s available scholarships can be broken into smaller portions, so the “15 available scholarships” may become 20, or even 30, smaller scholarships.
Likewise, be cautious of expecting renewable merit scholarships to finance a student’s entire college career. In some states, as many as half of the B-average students who receive merit scholarships as freshman drop below the acceptable GPA for a merit scholarship by the renewal period for their sophomore year.
Which brings up finanicial aid. Jurek explains that some forms of federal financial aid are need-based, including grants, work-study programs, certain scholarships, and subsidized student loans. Online tools to estimate financial need are available to anyone on EducationQuest.org, but for students to be considered for federal financial aid, they must complete the Free Application for Federal Student Aid (FAFSA) at fafsa.gov.
“‘I can’t afford it’ is a common misconception,” Jurek says. “There are ways to make college affordable including applying for financial aid and scholarships, starting at a less expensive community college, or living at home while going to college.”
Post-secondary education also doesn’t have to begin right out of high school. Adults can start their own 529 Plan, Goodkin says. There is no maximum starting age for college if life circumstances force delays, or if a young person wants to work for a year or two and put away money.
Whether or not a college savings plan is in place early on, the later process of researching college options, finding scholarship resources, learning about financial aid, and completing college applications and the FAFSA can still be daunting.
“Families who are worried about the college planning process—or don’t think college is possible—should be aware that free help is available,” Jurek says.
Alternatives to four-year degree programs
A common theory at this time is “I need a four-year degree!” Do you? Maybe not. In some fields, work experience counts more than a piece of sheepskin. Enjoy working in restaurants? A person could start working right away and work their way up. Many chefs do this, taking jobs as dishwashers or servers and moving through the ranks as they prove themselves.
“In certain areas you can actually earn more than a person who completes a four-year degree, and come out (of college) with no debt or less debt,” says Metropolitan Community College (MCC) Career Services Manager Monique Cribbs.
Others choose career paths that may or may not include some education from a community college:
- Earning an associate’s degree
- Earning a certificate of achievement for expanded coursework in a specific area
- Taking noncredit courses, which can expand a person’s knowledge of one subject
- Enlisting in military service, which provides career education and paid experience
- Joining a trade, such as International Brotherhood of Electrical Workers, which allows men and women to “earn as you learn”
A community college also offers core classes at a lower tuition rate.
“Community college is not a second choice or a consolation prize. It’s a valuable option for any person going back and increasing their knowledge or continuing their education,” says Cribbs.
This article was printed in the Fall 2017 edition of Family Guide.