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What options do I have for education planning?


One of the most common goals within the world of financial planning is saving for a college education.  While it may not be the best choice for everyone, college can certainly be an incredibly enlightening experience where students often make lifelong friends, find their passions, and hone the skills needed for life as an independent adult.

However, these benefits come at a cost, and that cost has only risen in recent years. According to data from the Consumer Price Index and the Bureau of Labor Statistics the price of college tuition has increased nearly 260% from 1980 to 2014.  More than double the 120% increase in the Consumer Price Index during that time.

To put these figures into more relatable numbers, the cost of a four-year public university in 1980 averaged out to a little bit over $9,438. According to the College Board for today’s students, in the 2020-2021 school year, that cost has risen to an average of $22,180 for an in-state public university, and if you were looking into private schools- that average price comes in at a staggering $50,770.

Clearly, the cost of saving for a college education is by no means an easy hurdle to overcome, but just because it may be difficult does not mean it is impossible.  In fact, when it comes to planning for a college education, you have a few available options. 


529 Plans:

One of the most common ways to save for college is through a 529 Plan, an account specifically designed to pay for educational expenses.

529 Plans host an array of benefits, including:

  • Tax-deferred growth within the account  
  • Tax-free distributions from the account when used for a qualifying educational expense
  • Options for plans being owned by: parent, student, grandparent, or anyone
  • Offered through different states, and does not limit you to the state of residence nor state the student will be attending school


CLEP and AP:

As discussed previously, 529 Plans can be a great way to save for college expenses; however, what if you want to reduce the cost of college itself? A potential avenue for this is prioritizing CLEP and AP exams while in high school.

A passing score on an AP or CLEP exam has the potential to:

  • Earn you college credits at a fraction of the cost of taking those same classes at a university
  • Reduce the number of courses you have to take
  • Reduce the amount of tuition you will have to pay

Per the College Board, more than 2,900 colleges across the U.S. accept CLEP or AP exams. If you are considering taking CLEP or AP courses, you will want to research your prospective school to ensure that your CLEP or AP exam will fulfill a degree requirement and that they will be accepted.

If you are not sure if your financial plan has college planning allocated correctly –  SRP WELLth can help you.  Contact us today to schedule a review of your financial plan; regardless the age of your loved one it is never too early to plan for their future!

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Wealth management (i.e. WELLth) services are provided separately from retirement plan consulting services you may receive from SRP as a result of participation in your employer’s retirement plan.  They may involve an advisory agreement and/or an additional fee. 

Prior to investing in a 529 Plan investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program.  Withdrawals used for expenses are federally tax free.  Tax treatment at the state level may vary.  Please consult with your tax advisor before investing.