Flora L. Williams, associate professor of consumer and family economics at Purdue University, says one important financial consideration some experts often ignore is the cost associated with raising and providing for a child each and every year of his or her life.
"Financial planners have parents so focused on how much it will cost to send their kids to college, they overlook how much their child costs them per year already," she says.
For example, some parents pay more in day-care costs than they would for in-state tuition.
"Day care can run close to $100 per week," she says. "Even if you don't send the child every week, you can easily spend more than $4,000 a year on day-care." In-state fees for 1994-95 at Purdue are $2,884.
Williams says that with financial sense, creativity and hard work, parents and students with modest incomes can afford a college education -- even if they can't find enough financial aid.
"Many financial planners provide valuable assistance in exploring alternate avenues," she says. "Others simply crunch a bunch of numbers, but don't provide alternatives. They do more harm than good. The numbers are so overwhelming, parents are starting to feel like financing a child's education is impossible. That's just not true."
According to 1993 figures from the U.S. Department of Agriculture, it cost an estimated $128,670 for a two-parent middle income family ($32,100 to $51,900) to raise a child through age 17. The annual cost averages $8,000 during age 15 through 17.
A portion of your annual costs will be offset when the student goes to college, Williams says.
"Anytime someone leaves home, you're going to see a drop in some expenditures," she says. "Obviously, all of those costs won't be offset, but your electric bills, heating bills, food bills and transportation bills, just to name a few, will decrease."
Some of the college expense could be shifted onto the child's shoulders, she says.
"Somewhere along the line there's been a transfer of responsibility where financing a college education is concerned," she says. "Not long ago, kids used to plan how to put themselves through school. Now, that responsibility seems to belong to the parents."
The "typical college experience" is another dream that increases college costs, Williams says.
"Everybody has to have the latest styles in clothing, an air-conditioned dorm room and a pair of roller-blades" she says. "Believe it or not, you can have a quality, exciting and satisfying college experience and not have everything everyone else does."
There are other ways students can cut costs, Williams says.
"Try buying a used car instead of a new one," she says. "It's a hard bullet to bite, but deferred gratification is a sound financial policy."
Williams says students can consider working for a couple of years to save money for college. Or, they could work part-time while going to school part-time.
"It might take a little longer to get through, but you won't incur a mountain of debt along the way," she says. "Choosing to attend an in-state public university, local community college or vocational school is a good idea, too, because it cuts tuition costs by more than half and allows students to live at home and commute."
For example, at Purdue, in-state fees for a full-time student are $1,442 per semester compared to $4,778 per semester for an out-of-state full-time student.
Private institutions cost even more, Williams points out. "At some of the Ivy League schools, we're talking about tuition of $10,000 per semester or more," she says.
Parents should begin planning early if they are footing the bill, Williams says.
"Try to save at least half of what you'll need in cash," she says. "Make up the balance with scholarships or grants, or by investing in mutual funds, CD's, stock equities, annuities, bonds and trusts."
If parents haven't saved enough, there are immediate avenues for funds, Williams says.
"You might consider taking out a second mortgage," she says. "Borrowing against your insurance policy is another alternative. But these are serious decisions, and you should give them careful consideration before making a move."
There also are creative alternatives that are worth looking into, Williams says.
"Consider purchasing an apartment or condo near campus and setting your child up as rental agent," she says. "Let them live there rent-free in exchange for their service, and charge other students rent. It's tax deductible, and when your child graduates you can sell the property at a profit."
Most importantly, don't get discouraged by astronomical numbers, Williams says.
"A college education is well within the grasp of the majority of people who are willing to do their research and work hard to get it," she says. "Despite what many financial experts are saying, by planning, evaluating your lifestyle and seeking creative alternatives, you can get a quality college education -- and it won't literally cost you an arm and a leg."
Source: Flora L. Williams, (765) 494-8297
Purdue News Service (765) 494-2096; e-mail, firstname.lastname@example.org
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