BY PAUL STANLEY
Paul Stanley
The cost of college tuition has more than tripled in the past decades, with the average cost of a college education in the United States hovering around $36,436 per year. Some tuitions — like Amherst College’s — are as high as $91,121 annually. For the 2024-25 school year, the average tuition and fees at private colleges increased 5.5% over last year alone. Interest rates for college loans have risen dramatically, and student loan debt has reached an astonishing $1.77 trillion. Many families are wondering how they’ll afford to pay for their children’s college education.
There’s no doubt that a college degree is a huge investment, but there are strategies that families can take to lessen the financial burden. To accomplish this:
Understand your tax-advantaged savings plans. If you have a 529 plan or Coverdell Education Savings Account (ESA), ensure that you know how to use it. These accounts offer tax benefits that can help offset the burden of tuition and related costs, but distributions must be used for qualifying expenses.
Revisit financial aid. Securing financial aid isn’t a one-and-done affair — it’s an ongoing process. Every fall, revisit your student’s financial assistance, including scholarships, grants and student loans. Keep in mind the Free Application for Federal Student Aid (FAFSA) must be completed annually to ensure continued support throughout college.
Utilize employer benefits. Some employers offer education benefits, like tuition reimbursement and scholarships for employees’ children attending accredited schools. Check to see if your employer (or your partner’s) offers this.
Take advantage of student discounts and resources. Use this comprehensive list (tinyurl.com/yu4p8rvt) to help your student maximize their opportunities. Additionally, urge your student to utilize campus resources, like career services and financial literacy programs, for more savings.
Be strategic with high school classes. Dual-enrollment programs and/or taking college-level courses allow high school students to earn college credits, which can help them take a semester or a year off of their college tuition. This can be a very effective way to reduce the cost of a college education.
Consider working with an independent college advisor. High school guidance counselors can be a great resource, but they’re often overworked. Private advisors often help with personalized career and college match services, as well as guidance around maximizing financial aid.
Prepare for emergencies. Establishing an emergency fund is vital to prepare for unexpected expenses that may arise during the college years. Additionally, it’s wise to create essential legal documents, such as a power of attorney, living will and HIPAA authorization, for your young adult.
Teach budgeting basics. Encourage your student to create a budget, outlining their expenses (i.e., tuition, books, housing, food and miscellaneous costs), and adjust it each year, as necessary. This is a helpful exercise, as many young adults have no idea how to create, or follow, a budget. Getting your student in the budgeting habit early can help set them up for fiduciary responsibility (and successes) throughout their life.
Educate your student about responsible borrowing. It’s crucial to understand the implications of student loans and the importance of borrowing responsibly. Talk honestly and regularly with your student about the long-term impact of student loan debt on their post-graduation financial goals.
Encourage part-time work. While focusing on academics is essential, encourage your student to consider part-time work to supplement their income and gain valuable work experience. Many universities have work-study and other employment opportunities right on campus. Your student may even be able to secure a paid research position or other opportunity related to their major, which will be valuable for their resume and post-graduation job search.
Plan for post-graduation repayment. Whether graduation is one or four years away, help your student develop a plan for post-graduation loan repayment, considering factors like income-driven repayment plans, loan consolidation and strategies for accelerating debt repayment.
Be mindful of how paying for college fits into your family’s overall financial plan. No financial planning issue can exist in a bubble. Consider the cash flow implication of paying for college on your other financial goals.
Consider carefully whether college is the right choice for your child. There’s a shortage of young people in the trades, and there are many amazing opportunities to have a great career in fields that don’t require a college degree to get started.
It may seem daunting to pay for college, but it doesn’t have to be. There are many valuable resources that your family can pursue to help fund your students’ education. It’s helpful to work with a qualified financial advisor to create (and maintain) a comprehensive plan to address all your needs — including paying for college — so you (and your students) can maximize your financial health and successes.
Paul S. Stanley, managing partner at Portsmouth-based Granite Bay Wealth Management, was recently named Best-in-State Wealth Advisor by Forbes. For more information, visit granitebaywm.com.
