So you've spent the last eighteen hard working years of your life saving for your kid’s college fund. You have poured in enough money, in your mind, to pay for two Ivy League educations and then some. In reality, inflation, which you didn’t think could have actually happened in that short amount of time, has taken quite the toll on your child’s college fund. So you were ahead of the curve and invested some of that money to counteract inflation? Well I’m guessing that account hasn’t looked too pretty either since 2008 and your own invested assets aren’t looking too promising either. No matter what your situation, the vast majority of Americans are not worry free when it comes to paying for their child’s college education. There are a few measures you can take however to increase your financial security in these funds.
Tuition rises. Every year. A lot. Not only is college tuition rising across the nation, but tuition rates are increasing at an alarmingly high rate. Recent data from the Washington Post suggests college tuition has increased by 47% from 1998 to 2008. Granite this does account for inflation as well, but in that same amount of time inflation has only increased everyday living expenses by 7%. Why this has occurred is a whole other tale of economic greed via supply and demand, but what we are here to do is help you survive and manage your money the best way possible through the tuition hikes. There are some public universities in the United States such as The University of Colorado at Boulder which are trying to combat this issue by giving you a lock in price upon your first semester. However, the majority of public and private institutions are not supplying this convenience to your financial planning.
The first thing you yourself can do to help protect your financial situation is to save and borrow and good amount more than needed. Recently in these tough economic times some state legislators are having to cut budgets drastically to stay afloat. One of the popular things to cut has been upper education. For example, over the past fiscal year in Pennsylvania the state government came out with a new budget cutting $40 million from the University of Pittsburgh’s budget. This in turn led to a 8.5% increase in tuition for in-state students. Pitt board member John Pelusi later stated the percentage “…paled in comparison to what the state budget has cut.” Many other institutions across the state such as Temple University have had to increase tuition by 10%.
You never know when a dramatic increase in tuition may hit, so one of the best things you can do to protect yourself is to not be afraid to take out student loans for security. Student loan rates are at an all-time low and now are under government control which has promised to keep them that way. Recently there was a bill in congress threatening to raise these rates, but was immediately shot down leading us to believe these rates are here to stay for a while. Taking out smaller loans over the four or five years you plan on attending a university may help protect you from unknown rate hikes or expenses. Always planning wiggle room in your college budget is a definite must do. By leaving this wiggle room you won’t go over budget protecting you from having to pull personal assets that you may want to be leaving in an IRA or some other retirement fund.
Here at Go Financial Aid we are here to help you tailor your personal budget with your child’s school of choice relieving you from the many headaches that go along with setting up a payment plan. And don’t forget we are also here to assist you with all things financial aid and anything else associated with getting your child through college.