Whether your child is just beginning the planning process, an entering freshman or a returning student, getting ready to send them off to college is traditionally an exciting time for all. But with the current pandemic wreaking havoc on well-laid plans, compounded by rising tuition and, in many cases, declining household income, that excitement has been clouded over by a host of questions.
Here we offer some guidance to help you and your child decide on the best path forward in these unprecedented times.
1) How is the coronavirus changing the college experience?
Although the pandemic should not be the driving force behind your child’s ultimate choice of a college, the all-around environment of college life is difficult to come by this schoolyear. For many students the higher the percentage of online instruction at their choice of college has resulted in a greater number electing to sit out this schoolyear. According to higher education market research firm, the Art & Science Group, this could be the biggest gap year ever, with roughly 1 in 6 high school seniors saying they were making alternative plans for attending college this fall.
2) How do we choose the right school?
Despite any aspirations you have for your child to attend a particular college, the ultimate goal is an education that leads your child to a successful and happy future. Studies show that the most important factors for a successful education are related to how engaged the student is with professors, projects, mentors, and extracurricular activities and organizations. This might well include a four-year college, but alternate avenues to consider are two-year community colleges along with internships or apprenticeships. This track might be especially appropriate, for instance, if your child has deferred this schoolyear due to the coronavirus. Alternatively, depending on your child’s career plans, a vocational or trade school might be more suited to both their needs – and your pocketbook.
3) What is the best way to pay for college if need-based financial aid is off the table?
If your household income does not allow your student to qualify for need-based financial aid, one of the best ways to save early for college is a tax-advantaged account. Some of the most popular options for college savings include 529 plans, Coverdell Savings accounts, and Education Savings Bond Programs. Although time-consuming, it can be well worthwhile to search for scholarships, merit aid and grants to ease some of the sticker shock. A great source is the Peterson Guide to Cash for College, which lists thousands of grants and scholarships. Start the application process no later than the early part of your child’s junior year of high school.
4) What is the return on investment for my child’s education?
One easy way to put your child’s college education into perspective is to compare tuition with how much money they stand to make after graduation, and then factor how many years they would need to work to break even on the investment. Begin by talking about their aspirations and career goals, then estimate how much money they can realistically expect to earn out the gate based on those projected goals. To research salary ranges for specific job roles in particular markets, you can refer to websites like Glassdoor.com and PayScale.com.
5) Should my child help pay for school?
It can be a good idea to have your kids assume some ‘skin in the game’ when it comes to the cost of their college education, especially given the statistics that a third of students won’t even graduate and nearly 60 percent will take up to six years to earn a bachelor’s degree.
For more information, contact Candice Nakagawa at [email protected] or visit our unionbank.com/private-banking to learn more about how we can help you better understand and evaluate the many options for a rewarding college education available to you and your child.
The foregoing article is intended to provide general educational information about college planning and is not considered financial or tax advice from Union Bank. Wills, trusts, foundations and wealth planning strategies have legal, tax, accounting and other implications. Clients should consult a legal or tax adviser.
