A Parent’s Conundrum… To Pay or Not to Pay (for college)… That is the Question

In a perfect world, every parent hopes to give their child the best start in life. You’d send them to a great school and watch as they enter the “real world”, debt-free, leaps and bounds ahead of their constituents. But, the reality is that college costs aren’t what they used to be. In fact, in 1984 the average annual cost of tuition for a 4-year institution was $5,160 (in current $)*. In 2014 that average cost grew to $25,409 per year*, according to the National Center for Education Statistics. That’s right, in thirty years college tuition has increased 5X. While helping a child with college costs may be a goal, many adults are hard-pressed to save enough for their retirement, let alone help pay for their children’s college tuition. But, the good news is that with the proper planning early on this goal is attainable!

When to Start

As the saying goes, “The best time to start saving is yesterday.” But, the second best time is today. If you’re an adult and you plan to have children someday it’s not a bad idea to start socking away a little each month. Remember that in this scenario time is on your side. The longer that your money has to grow the greater effect that compounding interest will have on your bottom line.

“The best time to start saving is yesterday.” But, the second best time is today.

If you already have children, it’s not too late. It doesn’t matter if you have 18 months or 18 years to save. What matters is that you start. For instance, if you’re able to put away $100/month for two years, that’s $2,400 that can go a long way in getting your child ahead. According to Time Inc., the average student debt payment in 2015 was in excess of $300**. Simply saving $100/month for just two years covers almost 8 months of the average student’s debt payments. Every little bit helps.

Know Your Options

So you’ve decided that you’re ready to save. Now what? It’s important to know your options. For example, there are tax advantages to certain savings programs, while others have more flexibility in how they can be used. Finding the right mix for your situation starts with knowing and understanding your options.

Wisconsin College Savings Program***

One great way to save money for college is through the Wisconsin College Savings Program. This program is made up of the 529 EdVest and Tomorrow’s Scholar college savings plans. These plans enable you to save tax-free dollars to pay for future post-secondary education costs, which includes tuition, certain room and board costs, computers, books and other related equipment.

The 529 EdVest and Tomorrow’s Scholar plans also make it convenient for grandparents or other family and friends to make gifts to the account for maximum growth potential. Learn more about these programs by speaking with one of our Investment Center representatives at (608) 795–2120.

College Saver CD

Another great college savings option is our new College Saver CD, which allows students up to age 25 to earn interest while still being able to withdraw funds twice per year after high school graduation without penalty. This CD also includes a “Bump-Up” feature which enables you to bump up your CD rate to the current rate once per year. This is especially useful if rates continue to improve. Theses added features provide more flexibility than standard CDs making the College Saver CD a nice option for a prospective college student.

Other…

We call this section “Other” because saving for your child’s college expenses is not “one-size fits all”. There are a number of ways to go about saving and paying for college. Scholarships and grants, for instance, can be hugely beneficial and usually take nothing more than a little time and effort to fill out an application.

We encourage you to speak with a knowledgeable financial planner and someone that you trust to ensure that you are maximizing your savings. If you don’t have one, reach out to our Investment Center representatives. They work with people just like you everyday to help them address their most pressing money questions.

Execution

The talking, debating, and planning are all part of the process. But, the key to the whole thing is in the execution. If you plan to help pay for your child’s future education costs the best time to start saving is now.

Remember every little bit counts!