(ARA) – It wasn’t that long ago that a summer job could pay for next year’s college tuition. Now, by working a summer job while you’re in college, you might be able to cover a few credits and a couple months’ rent.
Higher tuition prices are a fact of life for today’s students. Ultimately, they can lead to a student reconsidering or delaying his or her college plans. According to a 2010 survey released by TD Ameritrade, 36 percent of teens today would consider delaying or not going to college due to the expense it requires. This number is up from 31 percent of teens who reported the same in 2009.
“The recent economy has definitely had a profound impact on how we view higher education today,” says Stuart Rubinstein, managing director of investment products for TD Ameritrade. “Education can be costly for those who are not prepared, which is why we recommend taking a proactive approach to education savings.”
While today’s students are concerned about the expenses of college, it doesn’t mean they aren’t willing to save or are dismissing the importance of going to college. Among teens who are saving money, 66 percent are saving to pay for college, compared to 46 percent of adults who were saving as teens, according to the survey. When asked if education was essential to future success, 79 percent of teens said yes, while 57 percent of adults felt the same when they were teens.
For those teens and families trying to save for college, Rubinstein recommends the following steps:
1. Assess the details. Parents and teens should sit down together to analyze their current financial situation, determine what they are capable of saving and compare it with how much they expect the student’s education to cost. TD Ameritrade provides a college planner on its website that can help you determine these goals and find out what college savings options work best for you.
2. Select an education savings vehicle.
Compare the benefits of different plans, such as a 529 College Savings Plan, custodial account or Coverdell Education Savings Account, to determine which may be the best fit. Each has different tax implications or withdrawal options, so it’s important to know the details before you enroll. You can find more information on what to expect from college savings plans at www.collegesavings.org.
3. Monitor your financial progress. Ensure your savings plan is meeting your goals by monitoring its progress and making adjustments along the way to stay on track with your goals.
The fact that college is expensive won’t change anytime soon, but by planning ahead, you may be able to make the financial burden that comes along with higher education a little easier to bear.
