By David Lawhorn, Program Administrator
Kentucky Education Savings Plan Trust (KESPT)
Kentucky Affordable Prepaid Tuition (KAPT)
July 7, 2014

I have worked at a state agency for 14 years administering our state’s 529 college savings plan, and this is a question I get all the time: Why should I save for college? I usually try to answer this basic question by pointing out the below reasons on why it’s important to save for college:

The more a family saves the less they spend…

Over my years in higher education, I have found that when parents, direct family members (grandparents) and students save with a GOAL of helping fund college for a relative- the child tends to value the educational expense of college. By focusing on paying for the “true education cost,” families and the actual college-going member tend to spend less on what I like to call “social cost expenses” associated with going to college. It is my belief that a large amount of the student loan debt can be traced back to spending too much on the “wants” in college vs. the actual necessities needed to complete a college degree.

State and federal funding for higher education is not what it was when you went to college…

Over the past 20 years, state and federal funding for higher education has undergone major changes. Just 20 years ago, for state four-year institutions, the average governmental funding support was close to two-thirds the cost of education. This meant that families in the 1990’s were paying about one-third the cost to send their children to school. Now, jump forward to the 2010’s. The government funding model has almost reversed to the point that state schools now receive two-thirds of their funding from families. It is my belief that this funding model can be directly tied to a good portion of the one trillion dollar student loan debt that is currently weighing down many recent college graduates.

Save now or pay later for years…

The more a family can save for college, the less student loan debt their child will likely have. Student loan debt can last for decades depending upon the repayment arrangements. For new college graduates, the less debt they have, the better start to their early working career.
In closing, I think that saving for college with a tax-preferred 529 college savings plan is one of the best ways to help achieve the GOAL of an affordable college degree.

About the Author:

David Lawhorn is the lead program administrator for Kentucky Education Savings PlanTrust (KESPT) and Kentucky Affordable Prepaid Tuition (KAPT). Kentucky currently offers a direct sold 529 plan to it residents to help provide educational opportunities for the Commonwealth. David serves on the following CSPN committees: prepaid, communications and program.

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