(WTNH) — There’s pressure for a lot of students to continue their education in order to land the job they hope to have one day. But that next step to higher education comes with a higher price tag than many people account for.
John Boroff with Fidelity Investments said, “One of the most interesting findings of the study was that 25% of parents said they thought a year of college would cost $5,000 or less. That’s well below the national average. To put that into context, a year at an in-state public institution runs about $26,000 on average, so there’s a big disconnect there.”
Boroff said it’s important that families understand and start saving as early as possible. Every little bit helps.
If you’re looking for saving tips, Boroff has a good one for credit card users.
“The first one is to turn your everyday spending into saving by using a credit card that allows you to sweep rewards directly into a dedicated college savings account, like a 529.”
Another tip is when birthdays and graduations come around, ask for contributions to those accounts rather than a standard gift!
Fidelity found the average student owes over $37,000. You can cut down on that with proper planning. And for families with older children, the start of the school year is a good time to get on the same page about costs.
“The start of the school year is a great opportunity to sit down and have a family conversation where you can get your expectations out about costs, the students enrolled paying for those costs, and how those costs will impact your family’s overall financial picture.”
For parents considering helping out with a Parent PLUS Loan, Boroff says they tend to have a higher interest rate. And, since they’re in the name of the parent, not the student, the parent is on the hook for paying those back. So, you have to think about taking on that kind of debt, and how it can impact other financial priorities, like saving for retirement or paying off a mortgage.