How to Pay for College: Three Strategies

At this time of year, many families with college bound children are busy navigating the financial aid application process. A college education, long viewed as a pathway to the American Dream, remains a desirable goal for many, with some studies indicating as much as a 75% increase in earning power over the course of a career through the attainment of a degree. However, the soaring costs of higher education in recent decades have even middle-to-high income families wondering how best to fund this endeavor without jeopardizing their retirement or leaving their children saddled with huge debt. Finding the most efficient and beneficial path involves an understanding of both financial aid eligibility, as administered through the relevant government regulations and University policies, and the savings vehicles and strategies available to consumers.

Financial Planning for Baby Boomers

You were born between the years 1946 and 1964 — part of the explosion of births that resulted from World War II vets returning home and starting families. You’re often associated with the hippies of the 60’s and TV generation of the 70’s. You grew up with American Bandstand, Bewitched, Bonanza, Gilligan’s Island, and Lassie, and went to the big screen to see The Sound of Music and Gone With the Wind. You experienced the elation of our first steps on the moon, and the tragedy of the untimely deaths of John F. Kennedy, Robert Kennedy, and Dr. Martin Luther King.

Financial Planning for Generation X

We are adults in our 30s and 40s, born between 1965 and 1980 (Generation X). As children of the Baby Boomers, we benefited from our parents’ desire for us to go to college and further our education, even if they had not gone to college themselves. However, when the first Gen-Xers entered high school, America was in a recession, unemployment and inflation were high, and interest rates were in the double digits. By the time we started graduating from college, the stock market crashed and left us wondering if we had any financial future at all.

A New BMW or One Year of College?

Years ago a friend told me, “Paying for college is like buying a brand new BMW every year, but never getting to drive it.” Not only has it become one of my favorite quotes, but it motivated me to think about how I’d pay for my own children’s college educations. After some quick math, I realized that four years for both my daughter and son — with two years overlapping — would come to 8 BMW’s in six years. If my husband and I were going to be in a position to cover that, I knew we needed to start planning immediately.