Most of us think the cost of college is already extremely expensive, but it's expected to skyrocket in the coming years. It's actually rising faster than the overall rate of inflation, but the key to affording it is to have a plan, and start saving early.
When Brianca Taylor graduates from UALR next year she like many college students will have to find a way to pay back thousands of dollars in student loans.
Brianca Taylor, "When I graduate I'll probably have at least $30,000 in loans and that's not even done because I'm going to grad school."
In Arkansas the average student debt is just over $21,000, and the most recent numbers show in 2010 57% percent of students took out loans to pay for school. So is it smart to take out that much in loans? Amy Neathery with the Arkansas Student Loan Authority, a state non-profit that services federal and direct student loans has this advice: "If you have to take out a student loan. Only borrow what you need. Borrow Smart. Complete the federal form which is the free application for federal aid. "
The College Board based on past tuition and fee increases projects the cost of college for a public two year college will double from 2007 to 2025 to nearly $5000 a year. Thinking about an in-state four year university? It's expected to more than triple in that same time frame. If you have a child in kindergarten this year when the head to college plan on forking out nearly $20,000 a year. To attend a four year private university in 13 years the College Board projects it will cost a jaw dropping $71,000 a year.
In 2028 it's projected to cost $340,000 for four years at a private college, and $95,000 for four years at an in-state public university.
Dale Ellis with Arkansas College Savings Plans said, "There's literally the difference in price tags for schools between what you'd pay for a Cadillac Escalade and what you would pay for a Toyota Corolla and both of them will get you where you need to go just one you will look a lot fancier doing it but you will pay a lot more. "
So how can you afford it, and should you save or borrow?
Ellis said, "Typically when I'm asked when parents need to start thinking about this I say in the delivery room. I'm really not actually kidding."
His advice to students: study. To parents his advice is save.
Ellis said, "Every dollar you can save is a dollar you don't have to borrow and the potential difference between having a dollar you save and the earnings that grow with that and having a dollar you have borrow and then have to pay back with interest that dollar you save could be worth as much as $2 or more for what you have to borrow.."
Arkansas is one of 49 states that sponsors 529 plans to help residents prepare for the cost of higher education.
Ellis said, "The 529 plan works by allowing people to put money aside and the earnings on that money will grow tax deferred. They are not taxed like a typical savings account until it's time to draw it out."
And as long as it's used for qualified higher education expenses like tuition, fees and housing it won't be taxed. The state also offers up to a $5,000 tax deduction off your state taxes for contributing to one of the two state sponsored 529 plans and up to $10,000 for married couples.
So what if you haven't saved for as long as you would have liked? Regardless of your financial situation experts say scholarships and grants are available to just about everyone, but you have to do your homework and don't wait until the last minute.
High school students can turn to their guidance counselors for help and another resource is the Arkansas Student Loan Authority.
Neathery said, "We have a free college planning service. We offer a free scholarship search. We will search nationwide for scholarships for you so that's also a great tool."
Wednesday on Nightside we'll break it down and show you if the cost of college is worth it and what you can expect to make with a college degree versus just a high school diploma.
For information on Arkansas sponsored 529 plans and the Aspiring Scholars Matching Grant Program visit https://thegiftplan.s.upromise.com/ and https://thegiftplan.s.upromise.com/content/matchinggrant.html
To read the Arkansas Education to Employment Report visit: