September is officially College Savings Month in the state of Minnesota and across the nation. That means, for 30 days, state college savings plans—like the Minnesota College Savings Plan, financial planners, colleges, universities and many others associated with higher education, work to inform families about the opportunities they have to plan for the future and to help focus attention on the need for saving for future higher education expenses.
You’ve heard the numbers:
- In 2017, families spent an average of $23,757 on higher education (according to “How America Pays for College 2017” by Sallie Mae and Ipsos)
- Between 2011-12 and 2016-17, published tuition and fee prices rose by nine percent in the public four-year sector, by 11 percent at public two-year colleges, and by 13 percent at private nonprofit four-year institutions, after adjusting for inflation (Trends in Higher Education, CollegeBoard.org)
- The average cost of tuition and fees for the 2016–2017 school year was $33,480 at private colleges, $9,650 for state residents at public colleges, and $24,930 for out-of-state residents attending public universities. Additionally, room and board ranged from $10,440 at four-year public schools to $11,890 at private schools; and books and supplies averaged just over $1,200. (according to the College Board)
There are countless additional examples of why saving for college is wise. However, results from the Sallie Mae and Ipsos study showed that while 86 percent of families always knew their child would go to college, only 39 percent of parents made a plan to pay for it. Additionally, according to a 2017 TIAA study, nearly two-thirds (63 percent) think saving for college education should begin at birth, but only 26 percent of parents begin saving for education at their child’s birth; and 80 percent of respondents say saving should start before the age of six, but only 46 percent begin saving before their child turns six years old.
So how do we solve this problem? I want to encourage families to look at their saving options and begin saving TODAY. Studies show that simply having a college savings account makes your child three times more likely to attend college and four times more likely to graduate than if they did not have one. (http://www.ihep.org/better-together, May 2017) For families that already have a Minnesota College Savings Plan, consider annually increasing your college savings contributions and make sure you are on track to achieve your college savings goals by utilizing the Minnesota College Savings Plan calculator at https://www.mnsaves.org/tools/calculator/.
While it is often unreasonable to plan to save 100 percent of the college of college, a realistic goal for many families is to save 25 percent of projected college expenses. If this isn’t possible, save as much as you can. For as little as $25 a month, you can invest in your loved one’s future by saving in a Minnesota College Savings Plan, and this small investment can have a tremendous impact over time. Remember, every dollar saved is one less dollar you may need to borrow.
The Minnesota Plan makes it easy for families to save for college. Accounts can be opened online at their website www.mnsaves.org. They also have a lot of information available right there on their site, including some valuable planning tools. Contributions can be flexible and made on your own schedule, but it is possible to have monthly contributions established so you don’t have to think about it. Also, each contribution can be as little as $25!
Again, the website is www.mnsaves.org and the toll free number is 1.877.338.4646. If you would like to make an appointment you can do that as well with their appointment scheduler.