As a parent of an 18- and 20-year-old, our household has navigated lots of ideas about what path to take after high school – and how to pay for it. There are so many options! It’s an exciting time as your student explores what goals to pursue and what training or education is needed to get there. It is also time to determine the balance between your students’ goals and interests with the resources available to cover college-related expenses.
It is never too early (or too late!) to start planning for college. Of course, there are the steps of visiting your high school’s College and Career Center, learning about admissions requirements, or visiting schools. And very importantly, taking part in lots of interesting family conversations – including talking with your children to guide their selection process in line with what financial resources you have available.
To get started on this journey, let’s discuss college savings, assessing the cost of college, and ways to pay for it.
Start saving as early as possible: 529 Plans and UTMA Accounts
Take action, set up a tax-advantaged account, and contribute monthly to invest in your student’s future. Here is some information on two types of accounts to consider:
529 Plans
A 529 Plan is used exclusively to pay for qualified college expenses. A 529 plan can also be used for an accredited college outside the United States or an accredited trade school. It provides tax deferred growth and when you make withdrawals for qualified college expenses, they are tax free. A 529 is also flexible – it is possible to change the beneficiary to a different child’s name, which is helpful if a child decides not to go to college or there are leftover funds. The account owner is usually the parent or grandparent, which impacts financial aid eligibility less than an Uniform Transfers to Minor Act account (UTMA).
Uniform Transfers to Minor Act Account (UTMA)
An UTMA can be used for more than just paying for college. This is a great option if you are not sure how the funds will be used. Another way to use an UTMA is to supplement a 529 plan and set aside money for expenses not covered by the 529 like an unexpected car repair or a summer camp or vacation. The child owns the money held in an UTMA for tax purposes which can impact financial aid eligibility.
How much will college cost?
Average college tuition and fees can vary widely. For the 2024-2025 school year, U.S. News reports average tuition and fees costing $43,505 for private college; $24,513 for public, out-of-state college; and $11,011 for public, in-state college. For a specific example, a full-time resident undergraduate student at Portland State University will pay about $12,300 per year in tuition and fees.
Start planning! Is there a particular college your student is interested in? There are useful data sources to help you evaluate tuition costs, such as Peterson’s College Search Tool. Also check and see if the college of interest has a “net price calculator” on its website, a great tool to see a rough estimate of how much it may cost to attend. Net price calculators allow prospective students to enter information about themselves to find out what students like them paid to attend the institution in the previous year, after taking grants and scholarships.
It could be helpful to spend about five minutes entering relevant information into the calculator like GPA, intended major and estimates of family income and assets to get a better picture of how much it might cost to attend, considering what scholarships and awards a student may be eligible to receive. Here is an example of Portland State University’s net calculator.
Understanding tuition costs and perhaps the net price calculator are the first steps towards building a college budget. Items to consider beyond tuition, room, and board include textbooks, school supplies, and transportation. And remember to include regular expenses like a cell phone plan, laundry, and health insurance. There might be occasional unexpected expenses along the way such as car repair – boo! – or an opportunity to travel – yay!
Keep in mind cost estimates usually reflect the student attending school for about nine months of the year. As most students are off for the summer, consider what the costs will be over those months. Does your student move home? Or live in another city? If they live off campus, can they sublet or do they need to pay rent over the summer? Build into the budget how they will pay for the cost of living during that time.
Ways to make higher education more affordable
There are many strategies to contain costs as your high school student considers their future plan. Here are a few ideas:
Make sure the higher education plan aligns with your students’ interests and career goals. Trade schools may be more suitable and provide career-focused training. These programs can be completed quickly with less expensive tuition rates than four-year universities.
Take college credit in high school. Students might be able to transfer dual credit, AP, and IB classes to count towards their college degree.
As discussed above, if your student selects a college closer to home, you can benefit from in-state tuition rates.
Some states collaborate to offer in-state tuition or reduced tuition rates even if your student goes to school out of state. For example, the Western Undergraduate Exchange (WUE) provides access to participating schools in the West with students paying no more than 150% of the institution’s resident tuition rate.
Students also have the option to start their education at a community college. Students take essentially the same classes their freshman and sophomore years whether they attend a community college or four year university; they can then transfer their junior year to complete their bachelor’s degree at a four-year school. Great tuition savings! And if your student lives in Oregon, they could qualify for free community college called “The Oregon Promise.” Make sure to pay close attention to registration and application deadlines coming out of high school. Some other states have similar programs such as the Washington College Grant or California College Promise Program..
Sticking close to home? Save by living at home or off campus rather than in the dorms and on the meal plan if the school policies permit. (That is another savings of starting at community college – your student is not required to enroll in an on campus housing and meal plan for those first two years.)
Search for and apply for scholarships, especially ones the college of choice offers. If your student is involved in athletics, band, or other groups, sometimes there are special scholarships for people engaged in certain activities. Is your student in Oregon? Have your student look into the Office of Student Access and Completion (OSAC). Each year OSAC awards over six hundred scholarships just for Oregon students.
Work-study programs or finding a part-time job while studying can be an option as well. If your student can find an opportunity in a field they are interested in and gain experience while attending school, it’s even better! Oftentimes, part-time work can also provide your students with some skin in the game and encourage them to be more mindful of financial decisions.
Your student could consider joining the military, which could provide access to additional financial aid before, during, or after service.
Once your student gets started, encourage them to plan their college classes carefully and take a full credit load. Regular meetings with their college advisor help plan what classes are needed to earn their degree.
Fill out the Free Application for Federal Student Aid form (FAFSA)
Don’t skip it! The FAFSA form can determine your student’s eligibility for grants and aid for all income levels and takes less than an hour to complete. Do not assume you will not qualify – everyone should complete the FAFSA. The school uses the financial and demographic information you submit to determine your eligibility for federal aid. Additionally, many states and colleges use the data to award their own aid.
And don’t procrastinate! The sooner you fill it out, the more aid you may be eligible for as some financial aid is awarded on a first-come, first-served basis. You and your student will fill out the form each year your student is in school.
You can qualify for aid based on need or merit. Need-based is what FAFSA thinks is the difference between what your family can contribute to higher education costs as compared to the total cost of that education. Merit-based refers to achievement in areas like academics, sports, performing arts, community service, and more.
There are several types of financial aid. Some types of aid your student does not have to pay back: grants, scholarships, or work-study opportunities. Alternatively, your federal aid could come in the form of a loan which your student would need to repay.
Making up the difference: consider loans
Federal loans vary around how interest is charged and whether the student or parent is borrowing.
Direct Subsidized Loans are need-based and interest-free while the student is in college. The borrowing limit increases for each year of school the student completes.
With Direct Unsubsidized Loans, your school determines the amount you can borrow based on your cost of attendance and other financial aid you receive. Not everyone is entitled to a loan offering even if they qualify, therefore we encourage you to apply for FAFSA as soon as possible and see what your student is offered by the institution of your choosing. These loans allow students to add interest to the amount borrowed after graduation. Beware! This allowance means the student will end up owing more money. Consider making interest-only payments while in school to reduce the overall amount repaid. Note that interest rates are usually better with unsubsidized loans than with private loans.
Direct PLUS Loans are designed for the parents to take out the loan. You can borrow the total cost of college, minus financial aid received.
Private Loans are not subsidized or need-based and are offered by institutions like a bank or a loan company. Be sure to understand if a co-signer is needed and information about interest rates and flexibility of terms or other protections.
This all might sound like a lot!
In reflection, I can see the pride my own children feel about the plans they have made. It is so cool to watch them have fun, grow, and learn about the world. Soon, they will have the training to pursue their career interests due to hard work and good planning. I love my kiddos so much! It’s a joy to watch them take flight.
Do your best to stay involved and plan financially to help your child pursue a college education. We are here to help. As you make plans to support your young people’s education journey, let’s see how it fits into your overall financial plan. Let us know as questions arise around college savings, assessing the cost of college, ways to pay for it, or other topics that come to mind.
Helpful Resources
ECMC Resource Guides
https://www.ecmc.org/studentseducators/student-resources/resource-guides
Peterson’s College Search Tool
https://www.petersons.com/college-search.aspx
Portland Community College University transfer
https://www.pcc.edu/university-transfer/
Western University Exchange
https://www.wiche.edu/tuition-savings/wue/
State & Regional College Tuition Discounts
https://www.nasfaa.org/State_Regional_Tuition_Exchanges
OSAC for Oregon students
https://oregonstudentaid.gov/scholarships/
Joining the military and tuition benefits
https://oregongoestocollege.org/explore/military
FAFSA Estimator
https://studentaid.gov/aid-estimator/
About TenBridge Partners
TenBridge Partners is an independent financial planning and investment management firm based in Portland, Oregon with a simple focus of honoring the fiduciary responsibility of putting clients first.
Planning is central to everything we do. Our focus is on a complete understanding of a client’s and potential client’s needs through the financial planning process, before we move forward with anything else.
We bring clarity and confidence to an otherwise confusing financial world.
We are about people.
From the desk of
Libby Van Vleet, FPQP®
The information contained in this correspondence is intended for general educational purposes only and as a means for facilitating a conversation. Please consider our door always open to discuss your particular situation and how this information might benefit you and fit your specific needs.