Parents advised to start saving early for child’s higher education

May 8th, 2013 by Lynn

     By KRISTA MARRS

    kmarrs@citizen.com

     LACONIA — A recent study shows that, while more than 70 percent of New Hampshire residents plan on contributing at least half of their child’s college education expenses, they are on track for having less than 20 percent saved by time their child graduates from high school. 

    This was among the findings in the sixth annual College Savings Indicator for New Hampshire completed recently by Fidelity Investments.

    Despite such news, financial aid representatives said every little bit of money put aside for a child’ college education can help put them on a path of sound financial footing down the road.

    “Start saving something up front,” said June Schlaback, financial aid director at Plymouth State University. “We can only echo (Fidelity’s) concerns and encourage parents to please put money aside.”

    Fidelity uses a college savings indictor as a way to measure parents’ overall preparedness to pay for higher education. This CSI figure “represents the percentage of projected college costs that the typical family is on track to cover, based on their current and expected savings, and their college savings goals.”

    Of those New Hampshire families that were surveyed, 16 percent of parents said they planned to pay all the costs while 12 percent said they will not pay anything for their child’s college costs. The bulk — 72 percent — said they plan to pay a portion of the costs.

    On average, according to the survey, New Hampshire parents plan to cover 52 percent of the total cost of college. They will rely on other sources such as grants, scholarships, student loans, gifts from grandparents, etc. to make up the difference.

    However, the survey found that, despite the 52 percent average savings goal, New Hampshire families are on track to meet 18 percent of that savings goal.

    Schlaback said the key is starting to save for second- ary education as soon as a child is born.

    In today’s society, Schlaback said parents often feel as though they need to spend money on material items that the child wants at that given moment whenthe best thing to do, she said, is not give into every want of the child and focus on the great picture — saving for college. Schlaback said financial security for education is the best gift parents can give their child.

    In particular, Schlaback said the families that are living paycheck-to-paycheck are the ones that need the most help and guidance to college savings.

    “Something’s got to give,” said Schlaback. “Let’s face it, if there’s no money to save, you can’t save.”

    “There is no family that is the same and that’s why financial aid was created,” she added.

    Of the current student population at PSU, Schlaback said some 80-85 percent of students use some form of financial aid to help cover their education costs. According to its website, PSU has 4,238 undergraduate students and 2,500 graduate students attending the school.

    The undergraduate tuition (2012-2013) is listed on the website at $10,410 for instate tuition and $17,310 for students who are from out of state.

    Since PSU is an open enrollment school, Schlaback explained, students are accepted to the university based on their academic achievements and “if they would be a good fit” at the school. Once a student is accepted, then the school looks at the student’s financial aid needs.

    However, despite the financial needs, Schlaback said PSU has a limited well of funding to draw from.

    “We try to help as many families as possible and stretch the dollars as far as we can,” she said.

    The university has needbased federal funds available as well as non-need based federal loans as part of its financial aid offerings. Merit money, in the form of various scholarships, is also available to students of deserving achievement.

    Beyond financial aid, that is where a parent’s savings can kick in.

    In addition to tradition savings account, Schlaback said the 529 plans have become popular for families struggling to put money aside for college.

    A 529 Plan is a savings plan operated by a state or educational institution designed to help familie set aside money for future college costs. Named after the IRS Revenue Code 529, the plan was created in 1996 and is offered in nearly every state. Special tax benefits are given to the account holder and can be used at colleges nationwide.

    Schlaback said parents are not the only ones who should focus on saving. Students can get part-time jobs, if they have the time, and focus on spending priorities. Instead of spending money on frivolous items, Schlaback encourages students to better manage their finances.

    “The needs versus wants; they’re going to come up short if they think all their wants will be met,” she said.

    One final thought Schlaback passes on to students is to finish up their education on track and don’t spend extra semesters if at all possible.

    “Plan to get out in four years,” she urged. “That is the cheapest way.”

    In hopes of helping their students succeed, Schlaback said PSU offers financial literacy programs, such as the SMART and the new SALT programs, to help the students manage their student loans and provide them with detailed information on options of repaying and organizing the materials during the life of the loan.

    “We are committed that they know they can do this and when our students come out of PSU that they have access to this,” said Schlaback.

    Adding to equation is that many of the students — some 41-43 percent according to Schlaback — are first generation college students. She said a lot of confusion and question may arise since families are unsure of what to do, when to file the appropriate forms and not fully understanding the student loans.

    “We want our students to know that loans aren’t necessarily bad, if you are investing in your education,” she said.

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