Financial Strategies

From 2002 to 2003, the average tuition cost of a 4-year private college rose 5.6% to $18,273. Average costs at four-year public schools rose even more—9.6%—to $4,081 per year. And the cost for higher education is steadily increasing.

These figures aren’t meant to discourage you from sending your kids to college. But the truth is, while an education is a smart investment, it doesn’t come without a price tag. In fact, paying for college is one of the biggest expenses families incur, second only to buying a home.

Whether you’re trying to fund your expected family contribution, or financial aid is insufficient to cover the total college bill, there are financial management strategies you can take advantage of to make paying for college more affordable and less stressful.

Separating the good debt from the bad debt

When faced with education expenses, too many families fall back on the familiar sources of cash—credit cards, home equity loans, retirement savings. Unfortunately, these are among the worst ways to pay for college because they’re costly and they jeopardize your family’s assets.

The trick is to take advantage of better financial choices (good debt) and avoid the types of debt that put your family assets at risk (bad debt).

College Savings Plans

Although federal aid may pay for some of the costs of college, students and their families are expected to contribute to the extent they’re able. So the sooner you start saving, the easier it will be to pay your part. And, one of the easiest ways to get started is with a College Savings Plan.

College Savings Plans are state-sponsored, tax-deferred accounts that help families save for college. They’re available to anyone, regardless of annual income or age, and you can contribute to a College Savings Plan on behalf of a grandchild, niece or nephew, or your own child.

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