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Many professions consider a college education to be a vital step toward establishing a career. But while the average graduate with a bachelor’s degree earns $1.2 million more over their lifetime than a person with only a high school diploma, many young people sacrifice this potential income due to the continually rising cost of a college education.

Despite escalating costs, good financial planning helps many families put their children on a solid path to a four-year degree, says Benjamin J. Koval (www.soundpathretirement.com), president and founder of SoundPath Retirement Strategies.

“Planning for college expenses well in advance helps reduce stress, especially when it comes to external factors, such as hikes in tuition or student loan interest rates,” Koval says. “But though many families would like to see their kids go to college, many don’t have a plan on how to pay for it.”

Koval offers these tips on saving and funding for college:

 

• Start a Section 529 plan. “These plans are a solid savings option since they are not taxable as long as the money is used for college-related expenses,” Koval says. “Ideally you set up a 529 savings plan when your kids are little. It’s an investment plan that matures over the lifetime of the plan.”

• Get college credits while in high school. Many U.S. high schools offer Advanced Placement (AP) and dual-enrollment classes. By taking these higher-level courses while still in high school, students can be awarded college credits early.

• Familiarize yourself with the aid process. Koval says students should fill out the Free Application for Federal Student Aid (FAFSA), which uses their information to determine how much financial aid they might qualify for, including money from grants or state-funded assistance. “It also can determine how much a student could qualify for in loans if they become necessary,” Koval says.

There are many types of student aid, and amounts can vary based on many factors. Besides scholarships based on academic or athletic performance, Koval says students can also look into Pell Grants or privately funded scholarships awarded by foundations, religious groups or other organizations based on need or merit.

• Consider the community college route. Community colleges are a good option for students who don’t receive much aid from family or scholarship opportunities, Koval says. “The average cost per credit hour at a two-year community college is less than half the average cost at a four-year university,” he says. “And after two years at a community college, students can usually transfer their credits to a four-year university to finish a four-year degree.”

 

 

Benjamin J. Koval (www.soundpathretirement.com) is president and founder of SoundPath Retirement Strategies.