College Savings vs. Retirement Savings - How To Strike A Balance

Retirement (Photo credit: Tax Credits)

Saving money for both college and retirement goals at the same time can be challenging. The cost of a college education continues to rise faster than inflation, at roughly 5 percent per year. According to the College Board, the average costs for four years at a private college is now more than $150,000 — including $38,589 for the 2012-13 school year. Even going to your state’s university, it runs close to half that total at an average of  $17,131 a year. This is peanuts compared to what you need to save for retirement.

With the good intentions of keeping their kids out of debt, parents are footing the bill for college costs. They are putting thousands of dollars away for college expenses that would of otherwise gone to retirement savings. A recent study from Ameriprise Financial shows that only 24 percent of baby boomers were saving any money for retirement, in 2007 the percentage was 44 percent. Many college parents will be experiencing substantially reduced retirement lifestyles because of their kindness. 

Prioritize.

Put retirement saving back where it should be, "first". Your kids can finance college or attend a college where the costs are more in line with the families finances. Sacrificing your retirement plan to help your kids is never a good idea. Your kids will understand, besides tell them if you don't save for retirement you will have to move in with them when your old. That will help them get the picture.

Start Early.

The key to saving for anything is to start early. Start saving for college when the child is born. Waiting even a few years causes you to have to save more monthly and the amount of compound growth will be greatly reduce. Even just saving $50 or $100 per month will help you accumulate a large college fund after 18 years. Set up a 529 college savings plan to take advantage of the tax-free withdrawals for education costs.

Make it a Family Project.

Include your children in their college savings plan. Over the years, your children receive cash gifts for birthdays and holidays. A large portion of those gifts should be put in the college saving account. It's a good lesson in teaching your children the importance of saving and participating in the families financial goals. Why should the parents be the sole provider of college finances? Teaching your children the value of paying their own way has incredible benefits all through their adult lives.

Pick an Affordable College.

Pick a college the family can afford. A prestigious college is all well and good if you have the cash to pay for it. But if the family doesn't, is it worth putting the family in massive debt for only four years of college, just to have a diploma from an ivy league school. Other ways to save college costs is to attend a local two year community college and finish at the more expensive college. Staying in state will also afford you much more savings than traveling out of state.

Remember parents, giving your children a good college education doesn't have to mean breaking the bank and sacrificing your own retirement. It is possible to do both in a reasonable way. 

Colleges Cutting Tuition to Attract More Students

Image via WikipediaI never thought I would see the day when a college would reduce its tuition. Colleges wanting to attract more students are lowering their tuition costs to make it more affordable. This is a new trend to lower costs which will help middle-income families who make to much to receive grants but to little to afford tuition. According to a Smartmoney.com article, Edwin Welch, president of University of Charleston, in West Virginia says "We are hoping to recruit more students from that group (middle income) than in the past".

The colleges are giving discounts to be more affordable but their costs may still be higher than public colleges. The average annual cost of tuition and fees at a four-year public college for in-state students this year is $8,244, according to the College Board. Of the private colleges cutting tuition, Seton Hall University in South Orange, N.J., will offer the lowest tuition (roughly $10,000) for incoming freshmen with high grades.

The current situation comes at a time when FASFA grants are starting to be cut. The cost cutting by government is a result of future federal budget cuts that will have to be put on the backs of college students receiving grants. Add to that the dismal performence of college saving vehicles like 529 plans are the situation worse. Something will have to give and the only other place to cut is tuition costs at your local college and university.

Here are the colleges providing tuition discounts.


Cabrini College

• tuition cut: 12.5%
• tuition and fees in 2012-13: $29,000 (down from $33,176 this year)
• located near Philadelphia
• room and board - $11,742 

Lincoln College

• tuition cut: 24%
• tuition and fees in 2012-13: $17,480 (down from $23,000 this year)
• the cost of tuition, fees, room and board is $29,000 this year
• room and board is $7,000. 
• located in Lincoln, Ill.

University of Charleston

• tuition cut: 22%
• tuition and fees in 2012-13: $20,700 (down from $26,200)
• the university decided to reduce tuition by 22% for new students and give at least $6,000 in free aid to all returning ones. 
• room and board, which averages $9,000 a year, will likely increase by 1% to 2%.

William Peace University

• Tuition cut: 7.7%
• Tuition and fees in 2012-13: $23,900 (down from $25,900)
• located in Raleigh, N.C.
• cost of dorms is $6,186 and food costs will rise to $2,814.

Duquesne University

• Tuition and fees cut: 50% in the form of a grant for freshmen who enroll in its School of Education
• located in Pittsburgh, Pa. 
• Tuition and fees in 2012-13: $14,355 (down from $28,671
• Room and board will rise next year by 3% to 4% from its current level of roughly $9,800.

Seton Hall University

• Tuition and fees cut: roughly $21,000 for incoming high achieving freshmen
• Tuition and fees in 2012-13: $10,104 (down from roughly $31,000)
• located in South Orange, N.J.
• Room and board, which costs about $11,000 a year, will rise between 1% and 5%

The days of ever increasing costs for college tuition are coming to an end. The free money coming from government programs is beginning to taper off. Colleges will have to be more competitive with their prices to vie for less tuition dollars.

4 Misconceptions About College Financial Aid

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It's that time of year again when dreaded FASFA forms have to be filled out. The form that strikes fear in first year college students parents. FASFA is the Free Application for Federal Student Aid. It's a form that must be filled out so your student can apply for financial aid. It's quite a large multi page form that can be filled out online. We have 3 college students in the house so 3 forms must be filled out. 

At first it was a scary proposition to to enter your data concerning income, savings, and a variety of information at first. But we got through it and are receiving a helpful amount of money to help pay for college, now. We couldn't put 3 through college without it. This aid consists of grants paid to the school directly. It is not a loan, its a flat out grant. which is good because there will be no debt after graduation.

A lot of parents have mistaken preconceived notions about this process. Some of the misconceptions are:

1. I make too much money to qualify for financial aid. You shouldn't automatically assume that you won't qualify for need-based assistance. How much income you earn is only one part of the equation. What also matters is the price of a particular college. For example, some families that don't qualify for aid at moderately priced state schools may be in line for considerable help at pricey universities.

You can obtain an early assessment of whether your family might qualify for aid by using a free financial aid calculator. A calculator will produce an estimated Expected Family Contribution, which is what colleges would expect you to pay, at a minimum, for one year of school.

2. My home equity will kill my chances for aid. Most colleges won't care if you own a house and won't count home equity against you if you do. That's because the majority of schools rely on the federal aid application, the Free Application for Federal Student Aid (FAFSA), which doesn't ask parents if they own a home.

3. I have saved to much in my child's college fund. In reality, less than 4% of families are penalized for their savings. Even if you have state pre-paid college plans you don't have to worry because they won't be held against you.

 4. Don't think filling out financial forms are a waste of time or your odds of receiving aid is low. You will receive nothing if you don't apply. If you try you may be pleasantly surprised.

The FAFSA will be available beginning Jan. 1 for the 2011-2012 school year. The application should not take long if you gather the necessary documents before you begin. You can find out what information you'll need to complete the FAFSA by checking out the FAFSA on the Web Worksheet.

Also, the FAFSA on the Web Application has undergone dramatic changes for 2011-12, so be prepared for a new look. The changes are positive and the FAFSA Worksheet for 2011-12 can be accessed by using the "Browse Help" button in the header area of the FAFSA.gov website.

You can find College Cost calculators at the College Board and at TuitionCoach. 

Other posts related to College Finance:

How To Go To Medical School For Free

Divorced Families Cause Problems For College Students

Here are few videos to check out from US News & World Reports

Beat the FAFSA: Cast a Wide Net

Beat the FAFSA: Say YES to Loans

Beat the FAFSA: Don't Give Up

Beat the FAFSA: Parent Info?

Beat the FAFSA: Reporting Savings

Related articles

• Taking the Hassle Out of Student Financial Aid (turbotax.intuit.com)
• 5 tips to maximize financial aid packages for college (seattletimes.nwsource.com)
• Applications urged for fall college aid (seattletimes.nwsource.com)
• Philadelphia pushes students to apply for college financial aid (philly.com)
• Financial aid error in my favor? (ask.metafilter.com)

How To Go To Medical School For Free

Many government agencies, universities and charities are putting up the money to give free or nearly free medical school educations.

What does it cost to go to medical school? At a home state's medical school your likely to pay as much as $150,000. At a private school the price is double. But when you graduate and finish your residency you will be enjoying a 6 figure salary or more.

Before applying for admission and college funding, check the fine print to see what the school requires as service for the free education. Military scholarships, for example, require students to put 2 years of service for every year of scholarship.

The University of Central Florida is offering completely free medical educations to all 40 members of the class of 2013.

Vanderbilt is giving a few complete scholarships for a few top-notch students here.

Washington University is giving complete scholarships for a few students here.

The military, if your officer material, will pay your tuition and living expenses through 4 years of medical school. No matter if your in the Army, Navy, or Air Force. You will have to serve one year for every year of school.

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The National Health Care Service will pay tuition and living expenses for those training to become primary-care physicians. Recipients will be assigned to needy areas and must work at least one year for every year of a scholarship. They'll also need to be good and lucky: The NHS gets seven times more applications than it has scholarships.

The National Institutes of Health will pay tuition and a living stipend for those interested in spending the eight years in school necessary to receive an M.D. and a research Ph.D. through programs like its Medical Scientist Training Program. These scholarships are designed to help those who want to become research scientists, not Beverly Hills plastic surgeons.

Some scholarships cover only tuition, leaving medical students to pay for their living expenses, which can easily run more than $2,000 a month. Cleveland Clinic Lerner College of Medicine of Case Western Reserve University will offer free tuition to all future medical students. The Cleveland Clinic focuses on training researchers and academics. You'll need to have good grades, scores, and luck. Last year, before the new scholarship program was announced, the Cleveland Clinic received 1,423 applications for its 32 slots. It'll probably be even more competitive this year.

The Mayo Clinic promises every admitted medical student a scholarship of at least $25,000. That means students in the fall of 2011 will be charged no more than $4,200. And many will get other scholarships to cover that.

The National Health Service Corps will repay $60,000 in education debt for two years of service in needy areas. It will repay up to $179,000 for 5 years of service.


Another great money saving tip is to look into courses online for a variety of fields.

Related articles

• Medical Grad School Grants? (ask.metafilter.com)
• Full Tuition Scholarships for International Students (brighthub.com)
• Making the decision to go to medical school (kevinmd.com)
• 3 Steps Adults Returning to College Must Take (usnews.com)
• Man. offers deal to medical students (cbc.ca)
• New Dream Scholarship Fund To Aid Immigrant Students With Tuition (prweb.com)

Divorced Families Cause Problems For College Students

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The costs of putting your children through college are on the rise. Finding the money and saving it is hard enough. But when divorce enters the equation, college money suffers.

According to researchers from Rice University and the University of Wisconsin divorced parents contribute about a third of what married parents contribute to their children's education. Remarried parents contribute about half of what married parents contributed, though their incomes are similar to those parents that have stayed married.  

This is a shift of the burden from parents to other sources of money. Namely the student will be responsible for the money through borrowing or working much more.

Normally, married parents of students on average have contributed 8 percent of their income and have met 77 percent of the financial burden. Divorced parents contribute 6 percent of their income and only can pay 42 percent of the total college bill. When divorced parents enter into another marriage, they only can contribute 5 percent of their income and manage only 53 percent of the funds needed to go to college.

This makes sense because much of the family assets are used up in the divorce proceedings through lawyers and necessary expenses. Loss of income and money channeled  to support two separated residences, instead of the original one before divorce, causes money to be wasted. 

Another problem arises in divorced households is the FASFA (Free Application for Federal Student Aid) application that must filled out each year for financial assistance and grants. in a non-divorced home the FASFA is hard enough to deal with. In a divorced home the FASFA is much more complicated. Normally the household income is entered on the form, among other things, but the income of a spouse who remarried is supposed to be included. The step-father or step-mothers income must be included on the form. This may send the total household income through the roof resulting in no money for the student. Is it right to penalize the student because the parent has remarried. Isn't it right, that the students financial aid be arrived, at by just the biological parents. If a parent remarries why does the new step parents income have to be included. It should just be the biological parents income to determine financial assistance.

Even if one parent is dead, the FASFA does not take that into consideration. While the new step-parent may have children of their own, they to are penalized in this process because the new spouse's income must be included on the FASFA form. 

The results of divorced parents on their child are that the student has to pick up the slack of the lack of college money. They must work extra and save more. Applying for scholarships and grants are a way to help get the student through college and graduate. There are jobs that pay for college as you work. You need to get creative.

However you look at it, divorce takes it's toll on the children in ways we never have thought of.

Related articles

• Bucks: The Financial Impact of Divorce on College Students (bucks.blogs.nytimes.com)
• Bad News for College Students with Divorced Parents (blogs.forbes.com)
• Financial burden greater for college students with divorced or remarried parents (eurekalert.org)
• Kids of divorce get less for college (holykaw.alltop.com)
• Your Parents' Divorce Will Make You Pay More For College [Money Matters] (gawker.com)