College Education

Many kids only start thinking about college education when they reach high school. As for parents, it is a different story. College education costs are not going to get lower when your kids grow up. In fact, the costs increase as the inflation goes up. Thus, it is better to start early for you as a parent to start planning for your kids’ college education fund even when they are still babies.

The problem is that many parents have no clue about how to save money for their kids’ college education. These tips can give you a head start in the process.

- Research on the various college saving plans. Currently, in the market there are so many different types of college saving plans that offer different advantages. Study them and select the best one that suits your requirements. These plans offer attractive tax benefits which you can ask a financial advisor to help you if you do not understand how it works.

- Choose a prepaid college tuition plan instead. These plans give you the option to lock in the current college tuition costs which you do not have to deal with the increasing cost later. Furthermore, you do not have to select any college first at this stage. As the plans are managed by the states, the student is only allowed to choose any public college within that state which his tuition plan indicates. However, if he wants to go another college of a different state or private college, he has to pay more.

- Start early. When your kid is still a baby, it is the best time to get started. This allows you to put money into the children college saving fund every month but a lesser amount compared to parents whose children are in grade school and they have to put in a bigger amount to save for the kids. You have a head start and by the time your kid is ready for college, you have a healthy college fund for him or her.

- Put regular savings into your kids’ college education fund. Every month, you can put aside a fixed amount of money from your paycheck to your kid’s college education fund which you set up for them. When you get a bonus or money incentives, you should put some of them into that saving accounts. Bear in mind to keep within the annual contribution limit to avoid any unnecessary penalties.

- Use parent’s name for the college savings accounts. Why? This enables the parents to control the money or else the kids may use the money for their fun.

Now, you have realized that saving for your kids’ college education requires a lot of planning and it is at your advantage to start early. By choosing a suitable college savings plan and regularly putting money into the account, your kids’ college education is ensured.

I anticipate that the title of this article will probably upset a few people, but please bear with me and continue reading. I am certainly a strong proponent of learning and education, as I myself am a college graduate in Chemical Engineering. However, the chief arguments I would like to present are that education does not have to be formal to be effective, and that the main purpose of a formal education is to get a better job.

Basically, a college education is an investment in your future. Just as in evaluating the merits of any investment, you need to perform a cost-benefit analysis, with the cost being the tuition and fees, and the benefits being the increase in pay you could expect due to attaining your degree. The higher the costs, the larger the benefits need to be for the investment to make sense.

Let’s say you have a full ride college scholarship with all the trimmings. You would be crazy not to take advantage of such an opportunity. On the other hand, what if your college education will cost over a million dollars? The higher pay you could expect had better be much, much higher for such an enormous investment to be justified financially.

Learning Versus Formal Education

Often times people graduate from college and believe that their learning years are over for good, and for this they are usually thankful. This is unfortunate. In fact, I believe that your best learning years normally occur after you graduate from college. Please let me explain.

While we are part of the “school” system, we normally don’t feel inspired to learn, mainly because we are forced to be there. Even in the case of a college education, we are often “socially” forced to be there by family, friends, and society at large. Because we usually feel uninspired in such a rigid environment, the amount of learning we truly absorb is minimal.

Once we have graduated from college, we are now freed from the bondage of a formal education and can pursue knowledge on our own terms. We can choose to study astronomy, history, or basket weaving if we wish. The reason I believe we are able to learn more effectively after college is because now, for the first time in our lives, we are truly in pursuit of knowledge, and not some piece of paper. From this point forward, learning is conducted on our own terms and at our own pace. Now, learning has become our choice. And thanks to the internet and your local library, it’s usually free!

A “Quick and Dirty” Look at the Numbers

Let’s say you’re considering a career in medicine specializing in, say, pediatrics. Since it normally takes around 12 years to finish your schooling and residencies, you would not be able to call yourself a pediatrician until you’re around 30 years old. Assuming you owe $125,000 in student loans that are to be paid off in 10 years at 5% interest, you would be paying $15,780 in loan payments annually until you reach 40 years old. This is not a major problem because pediatricians make around $135,000 per year, but it will probably put your investing program on hold until the loans are paid off. Let assume once your loans are paid in full you begin investing 10% of your salary, or $13,500 annually. If your investments earn you 8% per year, you will have accumulated $1.1 million dollars by the time you reach retirement at 65.

Now let’s look at someone going to be a hair stylist. Assuming you are able to finish your training in 2 years, you will be ready to begin work at 20 years old. Now you begin investing 10% of your $30,000 yearly income, or $3,000. If your investments earn you 8% annually, your account will have grown to $1.3 million dollars by your 65th birthday.

As you can see, the high educational investment required of the pediatrician coupled with the early start of the hair stylist makes the financial decision more or less a wash. The main takeaway from this discussion is that your decision to pursue a high paying career requiring an extensive amount of education should be due to your passion for the field, and not because you believe it will make you rich. Furthermore, a large difference in annual salary between careers does not always translate into a large difference in accumulated wealth.

Summary

From my experience, a college education is not necessarily the most effective means of acquiring new knowledge. However, a college education is certainly an avenue for obtaining better employment opportunities. The key to determining whether a college education is worth it is to weigh the costs required against the benefits to be realized. As the cost of college continues to rise faster than inflation, the decision as to whether a college education is worth it will not be nearly as obvious as it used to be.

Students begin questioning the importance of a college education from high school itself. Some feel that being able to earn immediately after school is a more attractive proposition and they convince themselves that a college education is not that imperative in the long run. Others may find the costs of a higher education prohibitive and have other responsibilities to take care of. But, more than ever, students need to understand that attending a college provides opportunities and advantages that others might find lacking later on in life. Today, the global economy is becoming more and more competitive and in order to improve the chances for a well-paying job, a college education is extremely important.

According to the U.S. Department of Labor, 90 percent of the fastest-growing jobs of the future will require some post-secondary education or training. College graduates also earn nearly twice as much as high school diploma holders. The U.S. economy has shifted from being a manufacturing-based one to knowledge-based. Unlike with past generations, high school graduates are unable to qualify for the high-paying jobs that are now available. A college education undeniably serves as a gateway to better options and more opportunities.

There are a number of other reasons as to why it is important to go to college. Attending lectures from experts in the field, reading and researching encourages students to think, to ask questions and to explore new ideas. All this adds to student’s development and growth and provides college graduates with an edge over those who have only graduated from high school. College life also provides one with valuable connections and resources adding to the number of options available after completing graduation. Long after college is over, the people you have met may prove useful.

The variety of courses and programs available can be as specific or generalized as you require. From the arts and the humanities to pure science, business management to information technology, health care to graphic arts – the list is endless. Depending on one’s interests and aptitudes, a number of exciting career options are possible.

A college education is the best possible way to insure a higher earning power after graduation. There are a number of different majors to choose from, all paying differently but on the whole, a college graduate will earn more money than those who do not have a college education or degree. Companies are also looking for well-rounded employees. Those that can hold a conversation with confidence and a college degree signifies the level of discipline, effort and intelligence that most employers look for.

In fact, in keeping up with the increase in demand by mature students, colleges are offering more options for students who wish to return to their education even after they have entered the work force. People now realize that it is never too late to increase your earning potential or improve your chances of being promoted by seeking a higher education. Whether its people taking a break from their jobs or switching careers and resuming their education or those adults who are returning to complete an education that was left unfinished the first time around, schools now offer special online and accelerated courses as well. This allows even more options for those students who are juggling careers, family, and their education.

There is no doubt that colleges and universities today carry a heavy price tag along with them, but this should not discourage anyone from obtaining a college education. As the cost of tuition increases, so do the financial aid options. These could include local, corporate, federal and college specific loans, funds, and grants. Potential students need to explore all avenues of assistance before planning for degree program.

The truth of the matter is that there are no disadvantages to graduating with a college degree program. Along with increasing one’s earning potential and promotion potential, the most important improvement occurs with one’s self-image. A college education gives one a sense of accomplishment and confidence that may be just what is needed in your professional and personal life.

Did you know that the cost of a 4 year degree program is around $20,000 dollars per year.

The cost of a college education is probably the most expensive item in bringing up children today. When you take into account tuition fees, exam fees, living expenses, accommodation, books and computers it’s not surprising that the average cost of college education is over $20,000 per year and that’s before the social side of college life.

Today we live in a world where only the best educated and most prepared can succeed. The Job market is probably the most crucial and competitive element of our society and having a college education and degree goes a long way towards succeeding in it.

When our children are ready to enter the world of work it will be even more difficult and a college education will be essential to succeed. Here are 5 ways to fund your child’s college education.

1. The usual method of parental funding of college education is out of current income, that is out of your weekly or monthly salary.

Whilst this is the most common method of funding college education it is one that only the very rich or highly paid can afford to do with ease. Even if there are 2 salaries most families find it difficult and will require sacrifices, even more so if you have more than 1 child. At best most parents can only afford to contribute part of the costs of college education out of current income. Additional sources of income will be required.

2. Your child can work his or her way through college.

Many students have to work whilst studying but many find the experience of juggling a job, lectures and a social life very difficult. Often the result is that students drop out of college education, fail their exams or don’t do as well as they could.

3. Your child may have the opportunity to take out student loans to fund their college education.

Today the vast majority of students are forced to take out student loans to fund all or part of their college education. Usually to subsidize parental contributions, student loans are the most common way of students funding their own college education. Many students however, leave college with substantial debt and even with interest rates at historically low levels today’s students can expect to have to pay substantial monthly repayments for many years.

4. Your child may obtain a scholarship or be entitled to grants from either federal or local funds towards the cost of their college education.

There are many sources of student scholarships or grants and with a bit of research most students today can find some grant funding. These sources however cannot be guaranteed for the future. Whilst scholarships and grants do not have to be repaid and as such are preferable to loans they are not guaranteed or predictable and therefore relying on them for our children is a risk.

5. Take out an education savings plan to fund college education.

An education savings plan is a regular saving plan into which you and your children can contribute. The plans are administered by colleges or state authorities and can be taken out for any child including a newborn babies. Because of the effects of long term compound interest the earlier you take out your plan the easier it will be and the lower your contributions will be. Because the funds are built up prior to going to college students do not have to rely on scholarships, grants or loans and they can concentrate on their studies.

There are a number of options to fund your child’s college education but the only way funds can be guaranteed is by you taking out an education savings plan. With the education savings plan you decide what you can invest and your child can also contribute to his or her college education. With luck scholarships and grants will still be available as will loans to top up if necessary. If your child does not go to college the fund can be cashed in.

Taking out an education savings plan early will give your child the real opportunity of a college education and the best prospects for a job when they leave college.