By Robin Lott
Executive Director, Michigan Education Trust
June 2, 2014
Summer is finally here and it’s graduation time once again! Families are busy preparing to honor students and to celebrate many facets of milestone graduates. Pre-school children are being recognized for graduating to kindergarten. Elementary and middle school students are graduating to the next level and high school seniors are on their way to college. Many families are also thinking, “Wow, where did the time go?” Now is a good time to conduct a mid-year review of your college savings strategy. Gifts into your 529 prepaid or investment plan can further reduce future college debt.
The price of college continues to rise at a rate of six percent nationwide. Once a student enters college, the cost of tuition will also increase each year of attendance. Tuition costs only represent 33 to 50 percent of the total cost of higher education. This does not include expenses for room, board and books, which also increase each year. According to the CollegeBoard for academic years 2013-2014, the average cost to attend a public four-year college or university with in-state tuition and fees and room and board is $18,391. If you are attending a public four-year university out-of-state the cost increases to $31,701. The average tuition, fees, room and board for private nonprofit four-year schools is $40,917. While this is an average and will vary depending on the college chosen, it can serve as a guide to see how you are progressing toward your college savings goals.
Celebrate your graduate by being prepared to help meet the costs of higher education. Graduates with technical training, trade certification or a college degree earn more than high school graduates (U.S. Census Bureau, 2006), but without college savings and/or scholarships, they are graduating with a lot of debt (National Center for Education Statistics, 2009). While it is always easier to save when a child is young, it is never too late to save for college while taking advantage of the tax benefits of your state’s 529 prepaid or investment plan.