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There are many reasons parents put off saving for their child’s college education – but not many good ones! And often, the decision to delay – or worse, not to prepare at all – is driven by myths or misconceptions about college costs.
In reality, saving for college is pretty easy – and well worth it for your child’s future. Let’s “debunk” some of those myths, so you can get started right away.
When you look at college costs today, it’s easy to be overwhelmed by the thought of saving that amount. And you’re not alone. In reality, few students receive full scholarships, and for many families, paying the entire cost of a four-year college education directly from disposable income or accrued savings is not an option.
Instead, for most families, paying for college involves a combination of three things: financial aid, loans and college savings. By starting early and saving often, you can reduce future out-of-pocket costs. Remember, you don’t have to save the entire amount. The message is: the more you save, the less you and your children will need to rely on loans.
Yes, college costs for tuition, dormitory room, meal plans and fees continue to rise – the total price tag listed in any college’s enrollment literature may cause you “sticker shock.” The good news is that the sticker price is not likely representative of the true cost to many families.
The exact mix of loans, financial aid and savings matters. It greatly influences the true cost of college—and families who save even modest amounts early and often can potentially reduce their out-of-pocket costs significantly.
If you put off saving, you typically will rely more heavily on loans. That means paying off loans, with potentially significant added interest, for decades following graduation. Taking steps now – even small ones – can make even an expensive college much more affordable.
Understanding the basics of financial aid will make the process less daunting and is crucial in understanding the role a college saving plan plays in eligibility.
For many families, saving in a qualified college savings plan won’t have a dramatic impact on financial aid, but instead will provide many potential benefits.
If you are interested in starting a college education savings plan for your child or grandchild, talk to an advisor with Bell Investments today.