When you read and write about college admissions every day, you end up reading a lot about money. But in the past week, money has been especially hot in the news, so I thought I'd share a few items that have come across my screen in the past week.
Town & Country magazine claims to know "How Much It Really Costs to Send Your Kid to An Elite College," and the number they come up with is just a little over 1.7 million dollars! They're including $29,870 for music classes from ages six months to four years, $4,500 for a preschool admission coach, $104,000 for a private language tutor from kindergarten through high school, a $39,000-per-year private high school, and more. While there are families that pay that much for those kinds of services, you don't need to be worried at all if your family hasn't got almost two million dollars to get you from the womb to Yale. Think of it this way: rich people may indeed buy a Mercedes Maybach for $168,000, but that doesn't mean there aren't plenty of Kias available for under $14,000. And rich people may end up spending $1.7 million on education, that doesn't mean that you have to. The majority of students Ivy League schools come from public high schools, and only a tiny fraction of college students overall come from families with that much money.
The House and the Senate have each passed extensive tax reform bills. Each is different, and a committee has to combine them into a single bill for the President to sign, so it's not final yet. But some form is probably going to become law, and it's probably going to affect universities at all levels. If you plan on becoming a graduate student, or if you plan on borrowing money to pay for college even at the undergraduate level, then this will probably have huge implications for you and your bank account. Colleges and their bank accounts are also likely to take a huge hit, probably making less room for financial aid and scholarships.
One of the primary ways that people can save for college and get a tax break at the same time is to use a 529 account. There are two major proposals on the table for those: one is to let 529 accounts be used for K-12 private schools, not just college; another is to allow people to set up a 529 for you before you're even born.
So what's the main idea?
1. Once this tax overhaul gets passed, college is likely to be more expensive for you--unless you can pay full price.
2. It's not too late to set up a 529 and get the tax benefits, but it is too late to set it up before your birth.
3. Even if college is more expensive, it's not really going to cost you 1.7 million dollars--unless your family just wants to pay that much.
Related post: "Starting a 529"
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