You want the best for your kids and that includes helping them get a great education. Today’s competitive workforce practically demands a degree, and many parents want to ensure their children get a leg up on the competition by sending them to a prestigious institution or assisting them financially so they can focus on their studies. That often means parents end up paying for all or most of their children’s college education—an expensive proposition in this day and age, one that can run upwards of $200,000. Even if you tabbed education funds in your financial planning when the kids were young, you might worry that you’ll still fall short. If that’s the case, consider these three financial planning strategies to help your kids (and you) achieve their goals—without incurring serious debt or mortgaging your retirement.
Try an Institutional Combo to Save 40%
Most people think that enrolling in college is a four-year commitment to a single institution, but it doesn’t have to be. In fact, splitting a four-year course of study between 2 institutions can save you some serious cash, without sacrificing the quality of education your child receives.
Encourage your child to consider enrolling in a two-year program at a local community college instead of immediately jumping to the four-year commitment at a state or private institution. State colleges reported an average in-state price tag of almost $24,000 per year for the 2015–16 school year. Private institutions were even pricier, averaging over $48,000 for the year per College Data. Neither of those figures includes the cost of housing, learning supplies like books, or the costs of getting to and from campus. It’s easy to see how many students end up in such serious debt after graduation, even with careful financial planning.
By contrast, public community colleges offer a much more reasonable price tag, with the average in-state tuition running around $5,000, according to Community College Review with an out-of-state student paying an average of about $8,500. Once your child has completed two years at a community college, he or she can transfer to a state university, receive credit for the full two years of education at the community college and graduate with a diploma from that university. Using this approach would save you $38,000, or nearly 40% off of the $96,000 for four years at the average public university.
Who says your children need to stay in the US for their education? There are plenty of world-class options abroad, with many schools being just as prestigious as American schools. And if the price is right, why spend the extra money to get the same education?
Even considering that European schools charge non-EU citizens higher tuition, most Americans will attain considerable savings by choosing to study abroad. As reported by Sarah Grant in an article for Bloomberg, one student spent just $500 for 2 semesters of study in Germany—a fraction of what he spent for a single semester at Johns Hopkins University in Maryland. With prices like that and an opportunity to get an international educational experience, it’s not hard to understand why the number of American students studying abroad has grown by 70% in the last decade. And here’s another amazing fact: Ms. Grant’s article points out that there are 40 public and private colleges in continental Europe that offer free bachelor’s degrees taught in English to Americans and another 98 colleges offering the same for under $4,000 in tuition year. Even with room and board and travel to Europe, $16,000 for four years of college is far less than the $96,000 you’d pay on average for 4 years of in-state tuition at a public university in the US, 85% less in fact.
Go North, Young Scholar
Not ready to have your kids pack up and move to another continent for school? You can keep them closer to home and still save money on their education just by sending them north of the border. Tuition at many Canadian schools is a mere fraction of what their US counterparts are charging, often for equivalent educational quality. With the strong American dollar, attending a prestigious school like Montreal’s McGill University means you’re going to get the most bang for your buck. At tuition of $14,561 per year, it is $10,000 less than your average US public university—in most cases, that is hard to beat.
Parents who take a more creative approach to paying for their children’s college can cut college tuition costs by half or even more and avoid the often overwhelming debt that many college graduates carry today. And cutting college tuition allows parents to focus on other important financial priorities, like saving for their retirement.