College tuition has seen exponential increases in the past few decades despite freezes placed on tuition for Wisconsin-based universities. Depending on the program a student is considering, the school they plan on attending, and whether the student will be attaining an undergraduate degree or needing to go for their masters in a graduate program, the cost for college can be across the spectrum.
Marshfield Medical Center Credit Union encourages members to set savings goals as early as possible.
“There’s never a bad time to start saving for college, but the sooner in a child’s life you can begin saving, the better off you’ll be once your child is through high school,” said David Murphy, VP-Finance & Risk. “If I was personally setting a goal for how much to save for my child’s secondary education, I would target what an in-state 4-year undergraduate program is averaging today and add an arbitrary total to account for inflation.”
Depending on an individual’s financial situation, they may need the student to work to supplement the amount saved.
“I would not assume a percentage of the tuition would be covered by scholarships; rather, I’d prefer to save more and need less to cover tuition than vice versa,” said Murphy. “There are tax-sheltered savings products available in the marketplace that allow you to set aside money for certain educational purposes, but you’ll want to consult with a tax consultant to determine what amounts you’re eligible to save or what happens to the money if your child decides not to attend college.”
Murphy recalls his own college experience – without a large savings set aside, he was able to put off having to rely on student loans through scholarships he was awarded and by working summer jobs and outside of school.
“While I did have to take out student loans to get through the rest of my college, I was able to pay for the first 2-3 semesters from money I had saved up from working,” he said. “If you know what field you plan on studying in college, whether it’s a 4-year program or a technical school, I would encourage you to meet with your guidance counselor to see what scholarship opportunities are available to you.”
MMCCU provides its members with an education fund savings account that offers a higher dividend rate than their regular savings accounts and allows parents to earmark certain money for their child’s education.
“The funds can be used for any level of schooling, so if you send your child to a private elementary school, you can use the funds in this account to pay for the tuition of these schools,” explained Murphy. “As your child ages and is no longer attending school, no matter what level of schooling it may be, the funds will be turned over into a regular savings account and can be used for whatever purpose the accountholder wishes.”
Murphy added that it’s always a good idea for students and parents to be realistic about the career path a student has chosen to determine if the projected earnings for a particular career justify the costs with attending school.
“Even if a student drops out of school, any amounts borrowed for student loans must still be paid back,” he said. “Depending on the student loan program a student borrows from, these loans may not be dischargeable in bankruptcy, so no matter how dire the financial situation gets for a borrower, they may still be liable for the outstanding principal and interest of their student loans. We do not want to see students be saddled with student loan debt for their entire life post-college.”