Getting Your Children Involved in Reducing the Costs of College

When is the right time to begin saving for college? As new parents we have great hopes that our children will realize their full potential, including attending the higher education opportunity of their choice. Wanting to provide the best we can for our young ones, we cautiously enter the online offerings of various college costs calculators and “gasp!” can’t get our heads around the prediction of what a public or private university education will be eighteen years from now.

A recent Morgan Stanley Investment Pulse Poll revealed a vast majority (93percent) of high net-worth Atlanta investors, aged 25 to 75 with at least $100,000 in investible assets, expect their children or grandchildren to attend college. Furthermore, two-thirds believe a college degree is a “must have.” As a financial advisor working in Atlanta, these findings are not surprising as I often have conversations with parents and grandparents about how best to create a college savings plan for their children and grandchildren. Options such as a 529 Plan, a Coverdell Education Savings Account and an UGMA/UTMA can be useful savings tools. We also have conversations about how the price of a university education can be reduced with help from the children themselves.

According to the U.S. Department of Education, the best time to introduce children to college planning is when they are in middle school. This is an opportune time to encourage them to make the most of their high school experiences with an eye towards college. It can begin with helping your children think about the career they would like to pursue which will likely influence their choice of college. This is also a good time to develop a realistic college budget which includes tuition and fees, books and supplies, room and board and other costs such as transportation – and establish a savings account earmarked for education expenses.

In high school it’s important to maintain high academic standards and take advantage of Advanced Placement courses, if offered. Excelling in these classes may reduce the number of academic credits needed after your child enters college – possibly allowing them to graduate early. Earning college credits while still in high school, was found in the poll to be the most appealing way to defray the cost of education (92percent).

Encourage your budding college student to research scholarships. Two web sites, www.fastweb.com and www.finaid.org are examples of sites that contain search engines for numerous scholarships with varying eligibility criteria. Summer jobs and part-time work in high school can also afford your children the opportunity to set aside a portion of their wages to contribute to that education savings account you set up for them in middle school. Of those polled, other appealing ways to defray costs of college are to work on campus (89percent), work off-campus (77percent) as well as apply for financial aid (77percent). Information on federal student aid programs including Pell Grants, campus based aid programs, Stafford Loans, PLUS Loans and others can be accessed via www.fafsa.ed.gov.

The answer to the question of when to start saving for college is, of course, as early as possible and with a well thought out savings plan. Just keep in mind that while you are contributing to their higher education fund, the choices your child makes while in high school and college will ultimately determine the cost.

By Kristen Fricks-Roman

Kristen Fricks-Roman CFP®, CRPS®, is a senior vice president of Morgan Stanley Wealth Management, Atlanta. She can be reached at kristen.fricks-roman@morganstanley.com.

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