There's no guarantee that our kids are going to college, but we like to be prepared just in case. With tens of thousands of dollars likely on the line, having a strategy for college planning earlier rather than later can make preparations a little easier. Therefore, we have come up with some ideas that will hopefully help us get a better grasp upon college costs before the kids venture off to school.
Knowing cost estimates
With a good ten years until our first child even starts to consider various colleges and universities, we've begun reviewing college costs at surrounding schools. From community colleges to Big 10 universities, having an idea of which schools charge what can help us better understand our options.
Rather than just base our information on current national estimates, we prefer to visit the websites of various schools to gain more detailed information on current costs so that we can have a better idea of potential future expenses for our children. Visiting a school's financial or financial assistance website helps us get cost breakdowns for things like tuition, room and board, transportation, books and fees, entertainment and miscellaneous costs, and in-state versus out-of-state tuition differences. A great example of this is the University of Wisconsin-Madison's "Cost and Financial Aid" webpage where information about costs, in-state tuition, scholarships, and financial aid can be reviewed.
Both my wife and I had assistance from parents with our college costs. However, we both worked and paid for various aspects of our schooling on our own as well, and my wife undertook her payment for graduate school completely on her own. We both felt that this was an important part of the college experience.
Therefore, we plan to split our kids' college costs with them as well, using the payment structure my parents used with my schooling. We will therefore break all costs into thirds. The child will pay a third of all costs and we (my wife and I) will cover the other two-thirds. In this way, the child is responsible for a significant portion of financing their college education but not so much that they are restricted in the learning and college life aspects of their educational experience nor straddled with excessive debt upon graduation…and neither will we.
Avoiding debt by avoiding debt
The various payments for things we have in our regular lives can add up. A vehicle loan, a mortgage, credit card payments, student loan payments of our own, a home equity line of credit, and similar debt can make it hard to avoid having to take on additional debt to cover the kids' college costs. It's kind of a snowball effect where all those payments consume available income, forcing the undertaking of even more payments when new costs arise.
By staying debt free, we're looking to avoid having to take on further debt when it comes to helping the kids with college. To do this, we have taken several steps now -- things like paying off our mortgage, driving our used vehicle longer to avoid having to buy new, paying off our own student loans quicker than necessary, and avoiding credit card debt -- so that we can avoid payments on such things later. We hope that this frees up extra cash to put toward our kids' college when the time comes so that we don't have to undertake loans of our own.
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The author is not a licensed financial or educational professional. The information provided in this article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.
- Personal Finance - Career & Education