Is college savings the legacy you leave for your children?
Provided your name is not Gates or Zuckerberg, a college degree is still the ideal recommendation for young adults planning to venture forth in the business world or other professional career. Likewise, the competition for those coveted spots at various universities and colleges continue to heat up each year with more and more high school graduates seeking that diploma, “sheep skin,” “brass ring,” “paid my fee give me my C” at the educational institution of their choice or in some cases a sole alternative. Per the National Center for Educational Statistics, total undergraduate enrollment in degree-granting postsecondary institutions increased 28 percent from 2000 until 2016 with enrollment numbers just slightly under 17 million students.
For the academic year 2015-2016, annual current dollar prices for undergraduate tuition, fees, room, and board were estimated to be an average of $16,757 at public institutions, $43,065 at private nonprofit institutions, and $23,776 at private for-profit institutions. Prices for undergraduate tuition, fees, room, and board at public institutions rose 34 percent, and prices at private nonprofit institutions rose 26 percent, after adjustment for inflation, over the 2005/2015 ten-year period while private for-profit institutions pricing actually decreased by 16% over the same period of time.
Needless to say, the trend appears to be an ever-increasing price pinch for a college education for individuals not receiving a version of assistance through student aid, grants, scholarships, Abel Magwitch or manna from heaven. Not surprisingly, 70% of US college graduates finish school and embark upon their careers with a substantial amount of student debt. Cumulatively, that number is a staggering $1.5 trillion held by approximately 44 million Americans. Talk about a rough start!
As parents if we are fortunate enough to assist our children with the costs associated with a college education, what is the best way to plan and save? Is the answer a 529 college savings plan, an ESA account (formerly Coverdell IRA), various trusts and/or custodial accounts, or even lottery tickets? It is my belief that there is a much bigger consideration at hand and our question should more of a “who” rather than a “what.” I am referring to the selection of a competent and skilled financial advisor in the pursuit of college funding planning framed in the larger context of our overall financial picture and goals. If it is true that a college education could be the most vital inheritance and legacy we leave our children, then individuals should seek advice and counsel from a professional financial advisor just as they would seek treatment from a physician for health concerns.
The financial advisor should be one who can assist us in defining the bigger picture and developing a financial strategy to execute with a degree of purpose and certainty on items like saving for college, buying a home, planning for retirement, facing expensive health related events and so on.
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