Rising College Costs Batter Students and Families
By Brian Williams on Tuesday, October 23rd, 2007 :: 12:55 pmCategory: Financial News
College costs continue to outpace inflation, according to the College Board, putting more financial pressure on families.
In-state tuition and fees at public four-year institutions average $6,185 – equating to a 6.6 percent increase over last year (or $381 more), the College Board said this week. The overall U.S. inflation rate is estimated to be 2.4 percent this year, according to The Federal Reserve.
For families and students, rising prices for gas, food and health insurance are also obstacles to higher education. Many people will not be able to afford college, shutting them out of higher paying jobs.
The College Board also stated that as tuition increases, federal student aid has not kept pace, leaving college students and families seeking higher-interest private loans to fund their education. How does this affect families in various stages of college preparation?
Current college students
As tuition and fees rise, college students will be tempted to use credit cards to cover expenses such as textbooks and transportation costs. Credit card companies aggressively target college students, although some university officials and lawmakers are trying to limit their access to college campuses. College students who pay off their balance each month can build good credit by the time they graduate. However, many undergraduates amass staggering amounts of credit card debt, which in turn complicates life after graduation. Bad credit for recent graduates can disqualify them from jobs, auto loans and mortgages as they try to untangle their financial mess.
Parents of high school students
Parents of high school seniors may have to obtain more debt, in the form of student loans and second mortgages. Plus, they may be preparing for retirement in the form of a 401(k). Rising college tuition and fees mean they may have to delay retirement and keep working to fund their child’s college education.
Parents of babies, toddlers or elementary school pupils
Parents of young children should start socking money away now for their young one’s college education. If trends continue, college costs will be astronomical in about 15 to 20 years – and a college education will be unreachable for many people. A 529 savings plan allows you to put away money for a college education. Earnings from a 529 account are not taxed.
But let’s not be all doom and gloom. Financial solutions abound for whatever stage families are at in preparation for college. College students overwhelmed by credit card debt and looming student loan debt can seek credit counseling, often at their campus. They would learn way to better manage finances and possibly restructure their debt payments so they can easily pay them.
Parents who have a little time before their children head off to college can also work to pay off as much debt as they can. Debt consolidation and other debt relief can help in this matter. Debt consolidation condenses various debts into one loan, although the total debt amount stays the same. Credit card debt relief, such as debt settlement, allows credit experts to take various individual debts and work with creditors to achieve a reduced credit card debt balance for debt-burdened parents.
Author bio: Brian Williams, a graduate of the University of Texas at Arlington, has 11 years’ experience writing and editing at daily newspapers in Texas. Learn more about Credit Solutions. Credit Solutions is your alternative to debt consolidation.
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