The College Board states that one year of tuition and fees at a private university is over $30,000 and for state universities, that price is about $8,000, so it's no wonder that the average college student graduates nearly $30,000 in debt.
For the average family, it's never too early to start saving for college, says Nicole Mayer, RPG Life Transition Specialist. In each state, there are benefits to opening up a state savings plan called a 529. Some states offer a state income tax deduction for every dollar that's put in up to $20,000 or $25,000 a year. This money grows tax-deferred and if it's taken out for education, it's being taken out tax-free.
For the middle-class who may be living paycheck to paycheck, there are some strategies Mayer offers for saving for college. If there's a choice that needs to be made about whether to save for 20-30 years of retirement or 4 years of college, Mayer says there's not enough time to save for retirement. There are college consultants who help find families financial aid, grants and scholarships. Mayer says there are billions of dollars each year that goes unclaimed for scholarships and grants. While these consultants do cost money, it still is better than a year's tuition at a college.
Mayer says that financial need is a fine line because the middle class often does not qualify for financial aid. For some middle class families, their cost of living is so high that there is not a lot of disposable income but they would never qualify for financial aid. Mayer also recommends letting the child getting the loan because under the parents' name, there's less flexibility.
Nicole Mayer is a Life Transition Specialist at RPG Life. She spoke with Retirement News Today, providing online retirement news video content. Retirement News Today is a featured network of Sequence Media Group.