Education is a treasure and one of the best ways to ensure the financial security of your future and maintain the standard of lifestyle. Not surprisingly, several pieces of research show that those who have a university bachelor’s degree improve their employability and earn more, with a better lifestyle. Besides, the people who hold a master’s degree or intend to pursue a master’s degree even earn more. It is necessary to ensure that our education must be from an institute that helps us advance our learning capabilities while providing practical exposure to the subject matter. Selecting a suitable college or university without hindrances, such as a financial hindrance, is what most of us desire. Along with education, you must be conscious enough to find ways to finance your education since this part is the most crucial factor in earning a reputable degree.
Average tuition fee
The only problem with university education is fees, especially in the US. Many youngsters who aspire to gain higher education are unable to do so because of extravagant tuition fees. On average, public university tuition costs around $1,000 a semester, which is a lot compared to the per capita income of the citizens. The costs may skyrocket if the university is private. In the case of medical studies, the average fee rises to $14,000.
Avoid applying for student loan
Although student loans sometimes become mandatory to pursue further studies, there are also many hidden dangers of debt, which are not different in the educational case. If you want to study at the University of your liking, there are other ways to achieve this goal without having to reduce your standard of living. To do this, you just need to do two things: pre-save and make that pre-saving profitable.
When planning to pursue higher education, such as a master of taxation online, it is vital to keep these figures in mind, especially when it comes to postgraduate degrees. However, these amounts are not negligible, especially with the private education option. Most families do not have that money saved, and having to take it directly out of the annual budget can be a real disaster. Considering this scenario, applying for college loans may seem like a viable option at critical times but in such a case, you can go into severe debt.
Pre-save for your education
Pursuing an education is a source of expenses that can be variable and possible to plan for. The idea is to pre-save for your college fees before the deadline comes near to expire.
Pre-saving is the saving formula that works out, and you can save up to 20% of your pocket money without realizing it.
The trick is to withdraw the amount you want to save at the beginning of the month and transfer it to a different account or to the savings product you choose. Such saving products can be a fixed deposit, mutual fund, or purchasing stock shares from a reputed analyst. Best of all, you only have to transfer once and ask the bank to make automatic transfers every month. Only a few banks facilitate the automatic transfer system to a particular account.
Pre-saving ensures that you would save for your college fee (annual or semester) every month since you would not have that much money in your usual expenses account. This strategy confirms that you will be able to pay at the right time.
How much do you need to save?
The answer to this question depends on your specific objectives and amount you need at the end of the semester. For an idea, if you save $200 a month, after six months of your semester, you would have around $1200. This amount is enough for you to pay your college fee.
WHAT SHOULD YOU DO?
- If you want to reduce your monthly expenses by half, it will help you in increasing your savings. Deposit the saving amount in another account.
- If you already have more than $50,000 saved and want to get a high return profit, mutual fund investment, and fixed deposits in the bank are good options. The profit from this amount covers your college fees.
529 college plans
A 529 plan is a savings account with an advantage against tax. This type of savings account covers expenses for higher education. You can deposit the saving amount (after tax deduction) in 529 saving account which allows this money to be invested in diversified bond funds and low-cost stock. You can then withdraw this money with profit, and there would be no need to pay tax against this amount and pay your college fee.
Prepaid tuition plans
The nature of the prepaid tuition plan is quite different from the nature of the 529 plan since it supports the higher education of many students. But, the prepaid tuition plan is also a technique of savings like a 529 plan. If a parent is sure that their child is likely to attend an in-state public University, the prepaid tuition plan works perfectly in such a scenario. Parents can pay tuition credits at a predetermined fee in advance.
Tuition fees of colleges and universities keep on rising, but it is advised not to save all of the fees at once right now. With time, save a predetermined amount in installment to support your or your child’s education. Statistical analysts recommend saving only one-third of the current college fees for the future. On the other hand, if you are currently a student and looking forward to saving for a semester after semester, divide the fees into six months (twelve months for the annual) and save it in another account.