5-minute guide to saving for college

Posted By: Asim Mohammed

By 2020, you'll need an estimated (and heart-stopping) $225,000 to put Junior through a private college or $105,000 for a public university.

Conventional wisdom says the sooner you start saving, the more funds you'll accumulate. (See "How to afford a Harvard education.")

No one savings method is perfect for every family. Consider your tax bracket, your child's age, how much control you want over your investments and how much financial aid you expect to get.

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The value of a college education

By Jen Lynch

College is becoming more expensive for all students. Community colleges, public institutions and private universities have been hiking up costs in order to cover instructional payroll expenses and scholarship offerings. 1 out of 7 students attend private research universities, which are said to spend the most money per student, but also have the highest tuition rates. Spending on professors and general instruction at these institutions has decreased at a faster rate, compared to spending at community colleges which spend less per student. These community colleges are also trying to offer additional scholarship opportunities to help during the tough economy. By working with local high schools, financial advice and planning has been facilitated if the student continues to the local community college. 

Families are feeling forced to send their Duke or UPenn-eligible student to these community and public colleges, because the cost of tuition is too expensive and offered scholarships aren't enough to cover the expense. There has also been an increase in students staying in-state instead of traveling out-of-state for school, since in-state costs are more reasonable. Parents are also starting to send their kids to two-year colleges instead of four-year, and most students are beginning to pay for more of their own bill if they choose a four-year school instead.

Although families and students feel the pinch of the economy, many are still working to get to college, because they know that the return on investment of a college education is worth it. Sure payments on student loans and higher tuition costs are creating a somewhat dismal landscape for the future, many feel education is a necessity. Some financial aid experts disagree with recent trends, and encourage people to not make the decision between two-year vs. four-year or public vs. private. They say to apply to all your top schools regardless, and who knows, the financial aid or scholarship opportunity might just be there. 

Universities try to meet rising need for financial aid with more money, resources
With college tuition, students foot the bill
College students: Tuition hike could stall higher education

College a Hoax?

Posted By:

Asim Mohammed

As steadily as ivy creeps up the walls of its well-groomed campuses, the education industrial complex has cultivated the image of college as a sure-fire path to a life of social and economic privilege.

Joel Kellum says he's living proof that the claim is a lie. A 40-year-old Los Angeles resident, Kellum did everything he was supposed to do to get ahead in life. He worked hard as a high schooler, got into the University of Virginia and graduated with a bachelor's degree in history.

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'Safe' College Plans: 3 Things to Know

Posted by Jen Lynch

By Aleksandra Todorova

IN AN APPEAL TO PARENTS reeling from steep losses incurred in their 529 savings plans, several states are offering safer, government-insured investment options like savings accounts and CDs. But going the "safe" route may not be worth it for many college savers.

1. You may be better off in equities
With low risk come low returns. Because the money contributed to a savings account or CD is invested in low-yielding products, such as Treasury bonds, the returns on these products can be as low as 1%. So don't expect great returns.

2. Roll over now and you’ll lock in massive losses
With the market continuing to spiral downward, you may be tempted to roll over your 529 savings plan assets from equities into one of these new government-insured investments. But by pulling your money out now, you’re locking in losses that can run as high as 40%, says Brown. And when the stock market recovers, you’ll miss out on what will likely be much stronger returns than those offered by a CD yielding 3%.

3. Lump-sum contributions may be necessary
With 529 savings plans, investors are only allowed one investment change per calendar year (this year, the IRS made an exception, allowing two changes). That limit also applies to rolling over funds from a matured CD to a new one, says Feirstein.

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