With college costs skyrocketing and many Americans still reeling from the Great Recession, paying for college is like assembling a jigsaw puzzle. Families must determine where all the pieces fit and whether certain schools or degree programs are even worth the hefty price tag. When considering schools with above-average costs, parents and students should think about what income students expect to earn after graduation based on their career plans, advise experts. For instance, should you send your child to a private, out-of-state school that costs more than $150,000 for four years to study communications, knowing that the median wage for a reporter is $36,000 per year, compared with higher-earning majors such as engineering. The average starting salary for an electrical engineer is $60,646.
â€śThe economy has increased familiesâ€™ sensitivity to the bottom-line cost of college,â€ť says Mark Kantrowitz, author of Secrets to Winning a Scholarship (CreateSpace; $9.95) and publisher of college planning sites FinAid.org and Fastweb.com. â€śThey are also focusing more on the return on investment.â€ť Itâ€™s no longer enough to choose a school and then figure out how youâ€™ll pay for it. Today more than ever, families should consider evaluating schools by their net priceâ€”the total cost minus scholarships and grants, experts say.
While some parents may also consider slowing their retirement savings to fuel their childrenâ€™s college education fund, every parent should save at least enough to take advantage of a company match, says Deborah Owens, a financial educator and author of A Purse of Your Own: An Easy Guide to Financial Security (Touchstone; $15). If thereâ€™s no match, you need to be saving 10% of your income for retirement. Since the Roses both work in the school system they have pensions, so they are putting away money, $1,000 collectively each month in an IRA, to augment those funds.
â€śYou canâ€™t afford to shortchange your retirement, so let your children know that they will need to explore other ways of fundingâ€”from scholarships to loans,â€ť says Owens. If that sounds harsh, consider that parents who forfeit retirement savings for education may hurt their children in the long run since the kids will likely have to pick up the financial slack if the parents canâ€™t support themselves in their golden years, Owens points out.
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