Not sure which college savings plan is right for you? See also NerdWallet’s Best 529 Savings Plans of 2013.
By Charles Minoza
College education costs a lot of money. If you are a parent trying to send your kid to college or you are trying to look for a college for yourself that best suit your career path, it would take a lot of money to take that first step of enrolling in college. Even if our economy is slowly moving in a steady pace, college expenses still dig deep in your pocket. The best way not to feel this expense in one blow is to plan ahead of time. Saving for the future is really the way to go. You will never know how expensive college education can really be. Get that calculator ready and let’s take a look at a typical college expense.
College Educational and Lifestyle Expenses
The basic educational expenses for one college student involve the following:
- Tuition Fees – This is the most expensive fee for college. It can go as high as $35,000 per academic year. Schools have payment options to help out students enroll. Not everyone can pay an upfront payment of $35,000. The fee usually would vary from the course you would choose. Take note as well that tuition fees might increase every year.
- Books – Books would probably cost about $200-$500 per semester depending on the course.
- Program Fees – These are on the side miscellaneous fees which certain courses require. For example, if a student needs to use lab facilities and the like for his or her course then he or she will have to pay for it.
- Supplies – The basic supplies that any student need might include just a simple pen and paper to a tablet or a laptop.
If you think this is already expensive, it’s just basic educational requirement. Let’s take a look at lifestyle expenses of a student:
- Dormitory – Housing is another big expense of a college student, unless you live right across your university. Most universities have student residences. The least expensive houses are off- campus. With dormitory living, there might be monthly utility bills to pay.
- Food – Nowadays, most colleges have prepaid meal cards but you will still have to budget for food when a student eats out.
- Other expenses – This might include laundry, phone, internet, medical, transportation and the like.
Importance of Saving for College
Having seen the expenses above, we now have a ballpark figure of a typical college student’s overall expense. But knowing this just a semester before enrollment would be stressful on the budget. It is important to plan ahead of time. If you have money saved for college, a year before enrollment is just about the right time to prepare for financial expenses. But the best time to start preparing for college expenses is when your kid is born. You never know how much that tuition fee would increase when the time comes that your kid chooses to become a doctor. And this is when Plan 529 really comes in handy.
What is Plan 529?
Plan 529 is an initiative done by the government to help parents save money for their kid’s college education. It is an education savings plan, named after section 529 of the IRC, which created different types of savings plans for parents to choose from. Nearly every state in the country offers a 529 plan, so if you are a resident of CA but choose to study in NC, it is possible. Taking advantage of this plan even has federal and state tax benefits. It is low maintenance and flexible. It is actually the best way to save money for college.
It is never too late to save for college. Start saving now and lessen the stress of digging deep in your pocket when it is time for college enrollment. Let Plan 529 help you consider your options in saving college money.
Disclaimer: This article is a part of NerdWallet’s series of user perspectives on 529 Plans. The views and recommendations in this piece are held by the individual contributor and do not necessarily reflect the opinions of NerdWallet as a whole.