Does the potential cost of college have you worried? Today we are going to talk about ways to plan for college costs. There are several ways, but we are going to focus on 3 that I think you can control. This is near and dear to me as I have 6 kids, with the first one just entering her 2nd year of college. Possibly 5 more to go, so I appreciate any avenue to save money while still getting a good value in this area.
Personally, I think the overall strategy for college planning should be one of pursuing a good return on investment for the time and money spent on college. There are really two ways to get a better return on investment – either lower the amount invested, or increase the return. Today we are talking about lowering the amount invested, making it easier to afford to go. We are also going to stick to the things that are almost completely within your control – advanced placement credits, college selection, and military benefits. In a later video we will talk about some things that are nice, like scholarships, but not completely in your control.
Early on, long before a child is selecting a college, you can start to reduce your potential college costs through courses known as Advanced Placement courses your high school may offer. In our case, our local high school offered “AP” courses starting as early as sophomore year. How the basic AP courses work is that the child takes the course at their high school, and at the end of the year they sign up for a test for about $100. If they do well enough on the test, then many colleges will accept that as completed college credits. For example, my oldest daughter left high school with more than a full year of college credits (about 30 credits). The total cost for this was maybe around $1,000. Think about that. That boost allows her to get into higher level courses sooner, and likely get a double major in the same time that others would get a single major. What’s the downside? Not every college accepts the credits. The colleges least likely to accept the credits seem to be the prestigious schools, such as some of the Ivy League schools. However, most of the state schools do allow for AP credits.
Likewise, college selection makes an enormous impact on total cost. The average published tuition cost for local 2 year colleges is about $3,500 a year, compared to around $32,000 for private 4 year colleges. Public Universities are in the middle, around $9,500 for in state students in around $24,000 for out of state students. To help students and their families calculate these costs, many colleges have net cost calculators available on their websites. These calculators will ask a number of questions regarding your situation, let you know of certain scholarships that you may automatically qualify for based on factors such as GPA, SAT or ACT test scores, and analyze your financial situation giving you an estimate of expected aid to help determine what the rough net cost will be. The net calculators are important, since several of the private schools with quite large published tuition rates, will regularly discount to attract good students.
The last of the controllable costs is military benefits. The reason I am including them is that, for the most part, healthy young high school graduates could take advantage of them. And the benefits are quite significant. There are two basic benefits, the first being ROTC, or Reserved Officers Training Corps, and the second being the GI bill. The ROTC program is quite good. It varies by branch, but typically ROTC will pay your full tuition and a small monthly stipend through school at 1,000 or so schools. Some of the branches cover room and board at some colleges too. In exchange, you must serve in the military over the college summers and for a few years. It varies, but 4 years is typical. You also enter the military as an officer. It’s important to note that the military offers this program for medical school as well. The GI bill is used after service when looking to return to school. The benefits are impressive. Generally, if you serve 3 years and have a normal honorable discharge, you typically qualify for these benefits:
• Up to 100% paid tuition (in state), or up to about $21,000 per year at a private school.
• A monthly housing stipend – equal to the military Basic Housing Allowance, which seems to be a minimum of $800 per month, and possibly quite a bit more.
• $1,000 a year for books and supplies.
I bring these military benefits up because they are so impressively good, and so many people could qualify. Next time, we will talk about other scholarships, namely Academic, Athletic, Workplace, and Community and Specialty scholarships.
Respectfully,
Patrick Stoa
Financial Advisor.
patrick@maccofinancial.com
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. Opinions expressed are those of Patrick Stoa and are not necessarily those of RJFS or Raymond James. All opinions are as of this date and are subject to change without notice.