By Steve Crifasi, CTFA, CFP®
Looking at your newborn, the dreams of life ahead come easily, including vivid images of a young adult walking across a stage to receive a college diploma. However, with those dreams come certain realities, such as the worry about having a college plan to pay for your child’s education.
Families reported spending an average of $28,409 on college expenses for their children in 2023 alone, according to the “How America Pays for College 2024” survey from Sallie Mae, a private lender of student loans. To bring your dream to life, connecting with a wealth management firm and developing a college plan for your child’s future education is key.
5 Financial Planning Steps to Building a College Plan
Paying for a college education isn’t easy. However, by taking the right steps, you can create a solid college plan and cut down the stress over where you’ll get the money for your child’s education. To help you get started, here are five steps you can take to build an A+ college plan.
1. Get to Know the Value and Cost of College
While the cost of sending your son or daughter to a college or university may seem prohibitive, consider that not only does earning potential increase with higher attained levels of education, but the rate of employment also increases.
The median weekly earnings of a person with a bachelor’s degree was $1,493 in 2023, compared to $899 for someone with a high school diploma, according to the Bureau of Labor Statistics. The respective unemployment rates were 2.2% and 3.9%.
Still, when looking at the cost of college, it’s important to keep in mind that there are expenses beyond tuition, room and board, books, technology, and transportation. The U.S. Department of Education’s net price calculator can help you get a better idea of your costs.
2. Determine How a College Plan Fits Into Your Goals and Priorities
Nearly 40% of the cost of a child’s college education is paid from a family’s income and savings. You understand your child’s education is important, but you also have to consider your retirement and other financial priorities.
Financial professionals can help you work through building a college plan around your other financial priorities.
3. Start Early
Many families are turning to a 529 education savings plan to pay for a child’s college. No matter how you save, start early to take advantage of compounding interest. A 529 plan is sponsored by each state and comes in two flavors: a prepaid tuition account and a college savings plan.
Prepaid tuition plans lock you into schools in the state sponsoring the plan, while a college savings account can be used at any qualified school in the country. A 529 plan also can be reassigned to another beneficiary if your child earns scholarships to cover college costs.
4. Estimate a Target Goal
It’s unlikely you know where your child will attend or study yet, but to build a college plan, it’s essential to get an estimate of your goal. Having a sense of where you’re heading can help you determine if other sources of funding—such as scholarships, grants, family help, or student loans—may be necessary.
5. Include Your College Plan in Your Overall Financial Plan
Including your college plan in your overall financial planning can go a long way to putting your child through school and staying on track with your financial goals, including retirement. This is because having an estimated target allows the appropriate investment strategies to be chosen for your college plan.
Let a Financial Advisor Help Build You a College Plan Today
Paying for your child’s college may seem daunting, but working with a financial advisor can help you build a college plan designed to help both you and your child realize your dreams. At Westover Capital Advisors, we collaborate with you to find the right strategies to fit your needs.
To get in touch, call (302) 427-9600 or email [email protected]. We look forward to hearing from you.
About Steve
Steve Crifasi serves as Associate Director of Wealth Management and Business Development at Westover Capital Advisors, an independent, fee-only, and privately owned investment and wealth management firm founded in 1999 and based in Wilmington, Delaware. Steve provides tailored guidance and works in partnership with his investment, tax, and planning colleagues to understand clients’ wealth management goals and objectives and help fulfill them. Steve thrives off developing personal relationships with clients, serving as their reliable and trusted financial partner; and as a fiduciary, he provides advice that is always in their best interests.
An advisor since 2008, Steve has over 15 years of experience in the financial services industry. He began his career as a research analyst at Penn Square Capital focusing on the equity and private real estate markets and spent over 13 years at Glenmede and Wilmington Trust as a relationship manager for high-net-worth clients. Steve received a BBA in Finance from Villanova University and also holds the CERTIFIED FINANCIAL PLANNER® certification and Certified Trust and Financial Advisor (CTFA) designation from the American Bankers Association. In addition to his role at Westover, Steve is a member of the Delaware Estate Planning Council and Wilmington Tax Group. He has also served on committees for several local charitable and nonprofit organizations in and around Wilmington. To learn more about Steve, connect with him on LinkedIn.
