Being Prudent about the College Decision
Written by: Martin X. Shields
As we approach the beginning of another school year, the discussion will begin for juniors and seniors in high school about the potential direction they will take for college. What has always been an important decision has taken on additional weight given the dramatic college tuition increases seen over the past 20 years. According to The College Board, the ten year inflation rate for college tuition is approximately 5 percent. As illustrated in the graph below, assuming a similar inflation rate going forward, the annual cost of tuition, room and board will start to reach heights were it will be hard to fathom how most families could pay for them.
Source: The College Board
Based on this information, it becomes imperative for families to be much smarter consumers of higher education and not simply drown themselves in debt and not save for retirement in order to pay for these expense. Below are several points for families to consider regarding college.
* Approximately 50% of all students take 6 years to complete college so the magnitude of expenses is usually greater than expected. For many families, having your student attend community college for 1-2 years is a great way to gain college credits, get a better idea on the correct major and have the student gain more maturity to help insure the correct school is selected.
* To prepare your family for this rising expense, it is best for parents to begin funding 529 plans as early as they can when the child is born. New York State will provide a state income tax deduction up to $10,000 per couple for contributions made to the NYS 529 plan (www.nysave.org).
* When selecting schools, finding one that best fits a student’s personality and interests is much more important than simply attending the school with the highest ranking or perceived prestige.
* Discussing college and the associated expense with students as early as middle school helps prepare them to take the correct approach to their academics and sets their expectations on what schools might be a possibility.
* For many schools with big prices tags, there is frequently a sizable amount of financial aid that can be provided so it is important to evaluate school expense after financial aid has been considered.
* For many students, graduate school will also be needed so limiting the amount of debt a student takes on for undergraduate is vitally important. Also, for many fields, the scholastic ranking of the graduate school can be more important than the ranking of the student’s undergraduate.
IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Bouchey Financial Group, Ltd. [“Bouchey Financial”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, no portion of this discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Bouchey Financial. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Neither Bouchey Financial’s investment adviser registration status, nor any amount of prior experience or success, should be construed that a certain level of results or satisfaction will be achieved if Bouchey Financial is engaged, or continues to be engaged, to provide investment advisory services. Bouchey Financial is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Bouchey Financial’s current written disclosure Brochure and Form CRS discussing our advisory services and fees is available for review upon request or at www.bouchey.com. Please Note: Bouchey Financial does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Bouchey Financial’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please Remember: If you are a Bouchey Financial client, please contact Bouchey Financial, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.