With an estimated 40 million Americans currently paying of $1.6 trillion federal student loan debt, the idea of having a solid plan to pay for college is more pressing than ever.
Sandi Bragar, chief client officer and partner at Aspiriant in San Francisco, joined Rob Hart on the WBBM Noon Business Hour this week to explore how to create a college savings vision. Armed with this blueprint, prospective students might be able to dodge endless student loan payments.
“I can tell you planning ahead makes a really big difference,” Bragar told Hart. “And the best time is when your children are born.”
However, if parent’s miss that window, it’s not a big problem. Bragar actually said that its never to late to save for college.
“Really what you want to do is put together a vision,” she explained. “What is your education funding plan? Are you focused on college or will there be private K-through-12 education expenses that you wanna cover? Are you looking at funding on the college side, public universities, private costs? Graduate school, trade school, or some sort of mix? Having that vision is gonna be really important, because it’s gonna allow you to sort of back into your savings and investment plan.”
There are also some key things Bragar thinks people should know as they make their plans. One is that education costs inflate at a higher rate than other expenses, so funding plans shouldn’t be based on current expenses.
“We’re looking at... assumed inflation of 4-5% for college funding and so that can make a meaningful difference when you’re developing an investment plan around the money you’re putting aside for that future tuition cost,” Bragar said.
When Hart asked if most college planners really do have enough set aside for tuition, she said it depends on a number of factors. In some cases – such as parents who started saving during the Great Recession in 2008, when markets were low – investments worked better than they might have thought. In other cases, they might have worked out worse. That’s why a big vision for the future can help people comprehensively save for college possibilities.
