Experts explain higher education financing options

colorado-collegeIn a world of few constants, one thing’s for sure: College is expensive, and it’s only growing more costly.

Local institutions of higher learning are no exception. UCCS, for instance, saw an increase in its full-time freshman and sophomore tuition rates from $4,695 for Colorado residents prior to the 2013 fall semester, to just short of $5,000 for fall 2014. An out-of-state full-time freshman or sophomore paid just short of $8,700 last year for 15 credit hours, and this year paid $10,125.

A four-year undergraduate student at Colorado College will run up a total tab of approximately $240,000, tuition alone costing $184,000.

The rising cost of continuing one’s education has students and parents weighing both educational and funding options.

Never too late to start early

For those beginning early and saving often, a tax-friendly college savings plan is one recommended route. 

“Realistically, if you’re saving for college, one of [the] best avenues is a 529 plan available through different [financial planning institutions],” according to Elaine Redwine, associate director of financial aid at Colorado College. “If you start it early, those can be a really good investment for students planning on attending college.”

Section 529 was added to the Internal Revenue Code in 1996, and is a tax-advantaged, college-specific savings plan operated by a state or educational institution to help families save for college costs. 

CollegeInvest manages the state’s only 529 College Savings Program, according to its website. It offers four savings plans that range from no minimum to open and no minimum contribution to $250 at opening and a $50 minimum contribution.

“Contributions are dollar-for-dollar deductible against Colorado state income tax in the calendar year the contribution is made,” the website states. “Earnings grow tax-free inside the account and qualified withdrawals are made tax free.”

According to Jevita Rogers, director of financial aid at UCCS, “The biggest thing is getting students into the idea that college is possible.” 

Rogers added that 70 percent of students at UCCS utilize some form of financial aid, and options like the College Opportunity Trust Fund can be the first step toward an affordable education.

According to CollegeInColorado.org, “The College Opportunity Trust Fund (COF), created by the Colorado Legislature, provides a stipend to eligible undergraduate students. The stipend pays a portion of your total resident tuition when you attend a Colorado public institution or a participating private institution.”

Rogers said that stipend adds up quickly.

“It’s a program that doesn’t care how much your parents make,” she said. “Every student who graduates from a Colorado high school can apply for an automatic deduction. For a full-time student, that equates to $1,000 off their bill each semester.”

Things to consider

There are several factors to consider when opening a tax-advantaged savings account, Rogers said, including whether that money can be used in another state, what the associated penalties and fees are, and whether it can be transferred to another person if the intended recipient doesn’t go to college.

Rogers also said a checklist found at studentaid.ed.gov can help students and parents stay on course while planning for beyond high school.

The checklist provides advice from elementary school through the final semester of senior year, including meeting regularly with counselors, exploring the benefits  and drawbacks of federal and private loans and applying for student aid before beginning classes.

Additionally, she said it never hurts to determine aid eligibility.

“I’ve been doing this for a long time and minimally, twice a year, I have families saying they never thought they could receive financial aid,” she said. “They thought they made too much money and didn’t think they would get a loan. They charge everything on their credit cards with an 18 percent interest rate instead of taking a federal loan with a 6 percent interest rate.”

And while Rogers’ philosophy is that  everyone can go to college, not everyone does. According to information provided by Nanette Anderson, public information officer with Academy School District 20, the majority of D-20 graduates do go on to college, but those who don’t are counseled on a variety of opportunities, including vocational and technical schools, military enlistment, apprenticeships, internships and mission trips. 

Help yourself

Redwine said one way to prepare to pay for college is simply performing well academically before ever stepping foot on campus. 

“Grades in high school matter as far as scholarships go,” she said. “Juniors and seniors need to pay attention to that. They should also be keeping an eye out for scholarships that pertain to their own specific situations. There are scholarships for gender, ones for ethnicity, ones for first generation [American citizens]. Just do a scholarship search online.”

Scholarships help lessen the burden following graduation, when the bills begin to arrive, she said. 

“We hear horror stories in the news about students graduating with $100,000 in debt,” Rogers said. “That is something that happens, but at UCCS, the average debt at graduation is about $17,000, which is far below the national average. Choosing where to continue your education is a matter of being an informed consumer.” 

In addition, students and parents are expected to bear some of the financial burden associated with financial aid, according to both Redwine and Rogers. 

“There is an expectation that parents and students contribute to the cost of attendance,” Redwine said. “It is the responsibility of a student to contribute to his or her education. There is a self-help component [to financial aid].”

Redwine said costs can be defrayed through summer employment.

“[Students] could then save enough to cover the cost of books and supplies,” she said. “Part of my job is to help provide the reality of the situation. This is your financial aid over the next four years and this is your contribution.” 

Rogers agreed, saying, “Financial aid was not created to cover all expenses.”

Consult your advisor

The amount of planning can seem daunting, Rogers said, but the best place to start is at a financial aid office at a campus of your choosing.

“Financial aid offices are the best place to start because there are no fees,” she said. “Our aid counselors see parents and students on a regular basis. We provide as much information as possible and there’s no charge.”

While they will provide the tools to make informed decisions, Redwine and Rogers said they won’t offer financial advice.

“We’re not tax advisors, and a lot of these plans have tax implications,” Redwine said. “Your best course is to speak to a financial advisor, depending on your circumstances.”

Now, on to saving for graduate school…