It’s easy to think of college as a one-and-done life experience. But that may be a little misleading. It’s a process. And one that needs financial attention every step of the way.
Indeed, there are specific stages to the whole college experience. And how you handle one stage, either as the student or the one guiding the student, will likely have ramifications for what follows. And each phase involves significant time. Consider that you have to:
- Prepare for college, from as early as birth, perhaps
- Get into a school, a mission throughout high school, or even earlier
- Attend college, a multiple-year challenge
- Handle post-college hurdles, like debt
Each stage has its own set of costs and certain kinds of financial decision-making.
Uncomfortable truths about college saving
Here’s a guide to what those factors may involve.
Preparation: 529s and loans
Based on recent trends, tuition costs by 2037 could be as much as $133,000 for a four-year public university and $262,000 for a four-year private school (not including fees or room and board). That’s a hefty cost, and one that many families would find challenging to handle, depending on their circumstances and time frame. (Calculator: How much do I need to save for college?)
However, college-savings programs with tax incentives designed to help ease the burden are available. Some types are quite specialized (like custodial accounts and Coverdells). But probably the most well-known are 529 college savings programs. It pays off to study them, especially for new parents:
- 529 Investment Strategies: A primer
- Getting the most out of your 529 plan
- Families saving for college: A mutual approach
- 10 mistakes to avoid with 529 plans
- Savings vs. prepaid 529 plans
- Underutilized college savings plans
Unfortunately, many families don’t take advantage of 529 plans. Results from the latest MassMutual College Planning and Savings Study reveal that just 28 percent of families who expect their kids to attend a college or university intend to use vehicles like 529 plans to save. Most families are far more likely to use traditional savings accounts, which offer no tax benefit and currently offer very low interest rates. (Related: Pros and cons of non-college accounts)
Of course, as the entry point for college approaches, there are other financing options available to consider, especially if individual resources and savings fall short.
- A primer on college financial aid
- College tuition: Big changes for the FAFSA
- What high schoolers need to know about student loans
- Paying for college with Direct student loans
- Is student debt worth it?
And there may be special circumstances that can also affect the college funding picture. These may involve family situations or a student’s ability to qualify for scholarships.
- How to get a scholarship
- Sending twins or siblings to college: Financial options
- FAFSA changes could double some family college costs: Are you ready?
- LGBTQ scholarships on the rise
- Busted marriages and college financial aid
- Getting remarried and your child’s college financial aid
- Scoring a college sports scholarship
Getting in: Stress and choices
Every college-minded student and parent knows the application process can be grueling. Dealing with the stress can be a weighing factor on emotions and finances. Beyond test scores and extracurricular activities to round out an application, there can be cost items to consider. For instance, will hiring a college admissions counselor help? Or additional sports efforts?
At the same time, there are opportunities to think about how your choice of college may affect your finances and your future. These can range from what certain colleges may offer in terms of aid to what kind of college may be most beneficial to your career ambitions in the long run.
- College shopping: Big fish or big pond?
- Tips for choosing the best "financial fit" college
- On the hunt for the most generous colleges
- Applying to college amid a pandemic
- Preparing for the college decision letter
- 4 legal forms you need for your 18-year-old
Of course, it’s at this point that some people decide college may not be the course they want to take. Or they want time to pursue other ambitions before resuming their education.
- Want to take a 'gap year'? Check your wallet
- Alternatives for 529 college savings
- Alternatives for the non-college bound
- You’re out! When colleges revoke their offers
Attending school: Budgeting and studying
Once enrolled, financial considerations don’t stop. Beyond basic student loan management from semester to semester, there will be budgeting for things like meal plans, books, and living arrangements. There are also opportunities to reduce the overall cost of college through economization and taking advantage of various studying abroad or summer programs that may be available.
- 4 financial moves before you leave for college
- Biggest college freshman financial blunders
- What first-generation college students need to know
- How to save on college? (without a scholarship)
- 6 ways to cut college costs in half
- How to request more aid when finances falter
- The costs of doing a college transfer — and how to limit them
After college, debt and career
Unfortunately, many college graduates leave school with a significant debt burden. In fact, according to the College Board, 59 percent of bachelor’s degree recipients who took loans to get through school graduated with an average of $28,500 in debt in 2017, the latest data available.
That makes debt management a priority for most new graduates. There are refinancing and repayment options that may help, but they need to be carefully studied to understand their consequences.
- How to handle student loan debt
- Repaying student loans early: How to do it right
- Refinancing student loans: What’s lost, what’s gained
- Refinancing student loans: Variable or fixed interest rate?
- When student loan and 401(k) compete
- Seeking relief when student loans are unaffordable
- Parent PLUS loans: Digging out of debt
Of course, the goal is that most graduates will have some sort of career that they are embarking on. There, too, some financial decisions will have to be considered.
- What to consider in a job offer
- A financial checklist for your first job
- The freelancer's benefit checklist
- Why professionals tend to owe more student debt
- 7 ways to pay for grad school
- Getting the most from a graduate degree
With hope, college will have been a positive experience. And then, graduates can look ahead to helping their old college and the next generation.
- Helping your alma mater: 3 life insurance moves
- What happens to your student loans when you die?
- 7 financial gifts for the college graduate
Discover more from MassMutual…
Financial goals and debt management
5 personal finance blunders to avoid