As financial advisors, keeping a close watch on how college costs are trending is an important part of CWA’s work for our clients with school-age children. But we believe financial planning is a family affair and children who start learning financial principles early are more likely to be good stewards of their money long-term.
Many parents introduce young children to the idea of college savings early on through a piggy bank, or college savings account, but as they mature, we recommend taking it a step further by connecting their savings to a strategy by keeping track of the target, which in the case of college savings, is often a moving one.
One way to crystalize the concept in the minds of older children is by reviewing the College Board’s Trends in College Pricing report together each year, looking for trends and patterns in costs, and how where you live and the type of school your child is interested in attending impacts cost, and therefore their savings plan.
The report, which is released annually in November, is available in its entirety at CollegeBoard.org, and breaks down the total costs of college for the reporting year including tuition and fees, room and board, and also estimates for books, transportation, and personal expenses. The report reflects cost averages, but also shows variances across types of institutions, states and regions, and accounts for inflation. Reviewing the factors that affect costs allows young savers to see that a good financial strategy may involve making adjustments and honing plans as they go.
Age-appropriate tools to teach financial principles are all around; it’s OK to get creative. The key is to make it fun, and more importantly, make it a family affair.
Get started by checking out the College Board’s cost highlights for the 2015-2016 academic year together.
Public colleges (in-state students)
Tuition and fees increased an average of 2.9% to $9,410
Room and board increased an average of 3.6% to $10,138
Total average cost* for 2015-2016: $24,061 ($23,410 in 2014-2015)
Public colleges (out-of-state students)
Tuition and fees increased an average of 3.4% to $23,893
Room and board increased an average of 3.6% to $10,138
Total average cost* for 2015-2016: $38,544 ($37,229 in 2014-2015)
Private colleges*
Tuition and fees increased an average of 3.6% to $32,405
Room and board increased an average of 3.2% to $11,516
Total average cost* for 2015-2016: $47,831 ($46,272 in 2014-2015)
*The totals reflected are averages. Annual costs for selective private colleges can easily top $60,000 annually.
New REPAYE Plan Is Good News for Borrowers
A Revised Pay As You Earn Plan called the REPAYE Plan is now available to everyone with federal direct loans, regardless of when the loan was taken. The original Pay As You Earn Plan was only available for those who took out loans after 2007.
Other REPAYE Plan Highlights:
• 10% discretionary income cap on monthly loan payments
• Debt forgiveness after 20 years of on-time payments for undergraduate loans
• Debt forgiveness after 25 years of on-time payments for graduate school loans
Visit https://www.studentaid.gov for more information.
