Explore the many ways to save and pay for college

paying for college

once you fit all the pieces together, you’ll have a clearer view of how funding your child’s education works.

There’s no doubt that the cost of higher education has increased dramatically in recent years. Yet, perhaps surprisingly, the number of students enrolling in all types of institutions has increased as well. One reason may be the recognition that a college education makes financial sense. Another may be the commitment—and sometimes sacrifice—that families are willing to make in order to pay for the opportunity that education provides. But a third, and possibly equally powerful factor, is that families can turn to a number of sources to help them cover the cost of college.

The Role of Saving

Whether you’re a brand new parent or you’ve had lots of practice as a mom or dad, this probably isn’t the first time that you’ve thought about saving for college. It’s hard to avoid the bottom line: Colleges and universities, as well as the federal government, consider it your responsibility to contribute to your children’s higher education expenses. Without at least some savings, meeting that obligation may not be possible.

But it’s equally true that while saving may not be easy, there are a number of programs designed not only to encourage you to put money away for college but to provide tax benefits if you do. In fact, you may already have a plan to accumulate the money you anticipate needing. Among the most widely available choices are those that share the 529 label: college savings plans, state prepaid tuition plans, and the private college prepaid plan. Another alternative is the Coverdell education savings account (ESA), which has lower contribution limits but more flexibility in choosing investments.

planning for college

preparing for college takes time—and money—but the rewards are well worth it.

Is providing your child with an excellent education something you care deeply about? For many parents that means paying for—or helping to pay for—an undergraduate degree, vocational school, or technical program after high school. And, if the child wants to pursue a professional or graduate degree, some parents support that schooling as well.

Part of making education a priority is understanding what it will cost and what you can do now to be ready to pay the bills when it’s time for your child to enroll. A good place to start is by learning how many options you and your child have. They include not only the number and variety of schools he or she might attend, but the range of alternatives for saving and borrowing that are designed specifically for education.

A Range of Choices

There are over 4,000 degree-granting colleges and universities in the United States, plus a number of certified vocational and technical schools offering specialized training programs. The most basic distinction is between public institutions—those that are supported at least in part by state tax revenues, or, in a limited number of cases, by federal tax money—and private institutions. Every state in the United States has a public university system that includes one or more major universities, four-year colleges, two-year community colleges, and sometimes institutions with a specific focus, such as veterinary medicine, agriculture, or hotel management. The largest system, New York’s, has a total enrollment of over 400,000 students. Private colleges and universities, which are supported primarily by tuition and fees, investment portfolios, and fundraising efforts, are a presence in every state. There are also a small number of private two-year colleges and some for-profit institutions, whose financial structure resembles that of for-profit hospitals.