3 Ways To Fund College/University Costs

With my own daughter having just finished her first year at kindergarten and fees for the second year having just been announced, now seems like a pretty good time to be taking a look at education costs. In particular, I want to focus on university/college costs.

I know that it is quite a jump from kindergarten to university. However, without the aid of a time machine, there isn’t much that I can do about planning for kindergarten costs while with 16 years until university, there is a lot that I can do about that.

The first thing, is to consider the various ways in which these costs can be funded (let’s assume that I would prefer that she didn’t spend the first 10 years after her graduation repaying loans). Having had a think, the main ways that I can see are as follows:

1. Pay the costs from my income. If I don’t do anything about it now, this is the most likely option. However, given that by then I will be in my early 50′s and should be focusing on my own retirement, this would hardly be ideal.

2. I can look at investing money over the next 16 years so that I can use the proceeds to cover the costs. This can be done in two ways. Either by contributing a regular monthly amount into a savings plan or I can invest a lump sum/ series of ad hoc payments.

The benefit of this is that the compound growth on my investment does a lot of the heavy lifting for me.

3. Scholarships, grants, etc. To be honest I am pretty sceptical about this. A lot of universities had their endowments trashed in the credit crisis while at the same time committing large sums of money to grand new extensions. As a result their ability to support has been reduced.

Government support? Hmm, I don’t think I’ll count on that. Most governments have far bigger funding problems to worry about.

At the same time, I am happy to take any money that is going (it’s the Scotsman in me) so I intend to look into this further and will post my findings in a future issue.

In reality, I will probably end up using a mix of all 3. The one thing that will influence to what extent I have to rely on 1 & 3, is how smart I am now.

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