Financial Planning for College Part 1: Estimating costs and Reviewing your funding options

by HC Wealth Advisor, Ismar Zildzic

Part 1: College Financial Planning – Estimating costs and reviewing funding options

Navigating the vast landscape of college financial planning can seem daunting. From evaluating college costs to expertly managing funding sources, it’s important to have a comprehensive understanding of the basics. That way, you can make informed decisions when laying the groundwork for a successful college funding plan.

Decoding the Essentials

Estimate Costs:

The initial step in your college financial planning journey is to estimate the potential education costs. Assess which school(s) you’re considering, their locations, and institution types (public vs. private). When considering multiple institutions, compare the costs of each to determine your cost range. Analyze the costs and consider expenses beyond tuition, including housing, living expenses, books, etc. While opting for a community or state college over a private institution often means lower tuition costs, public colleges located far from home will require you to factor in housing and living expenses.

Review Funding Options:

Understanding funding sources, including personal savings, scholarships, grants, and student loans, is also key.

• Personal Savings: Funds accumulated over time in accounts like 529 plans that offer tax advantages for higher education expenses
• Scholarships and Grants: Payment made to support a student’s education, scholarships and grants are awarded based on merit or achievement and do not have to be repaid. They require effort for researching potential opportunities and submitting applications and can be acquired via various avenues. So, it’s wise to connect with high school counselors and potential college admissions personnel for recommendations.
• Student Loans: Money borrowed from the federal government or a private entity to pay for education, loans must be repaid with interest. While often necessary, they should be considered as a last resort when devising your financial plan. Remember, borrowing to fund your (or your child’s) education is a long-term financial commitment. Sourcing funds via loans means you may be repaying them for several years post graduation.

Check out these resources for more information:

https://www.scholarships.com/
https://accessscholarships.com/blog/50-scholarships-for-college-students/
Grants are often offered through local, state and federal government agencies including Sallie Mae, and the Federal Pell Grant Program which is offered through the DOE.

College financial planning is more than determining how much to save. It also requires assessing when, where, and how to save and invest your funds. The earlier you start, the better as time allows your savings/investments to compound and grow more effectively. Before devising your financial plan, let’s dive deeper into scholarships, grants, and financial aid in our next edition.

Disclosure:  The information provided here is general in nature and is shared for information purposes only; nothing herein should be interpreted as investment or tax advice. Any and all tax laws and/or specific tax rates referenced are subject to change. It should not be assumed that future performance of any specific investment or investment strategy will be profitable. Always consult your CPA/tax advisor/attorney (or reach out to us;) to discuss your specific situation. All investments carry the risk of loss, including the permanent loss of principal. Past performance is no guarantee of future results.