Savings plan in place to assist with college
After the diplomas have been handed out and caps have been tossed, thousands of newly minted Minnesota high school graduates have to face the challenge of financing a college education.
With tuition rates rising across the country, the Minnesota Office of Higher Education is urging parents to begin saving for their children’s educations early. They are getting the word out about savings opportunities offered directly by the state.
One such opportunity is the Minnesota College Savings Plan.
“Every dollar you save is one less dollar you have to borrow,” said Robert Stern, manager of the plan.
Current numbers from the National Center for Education Statistics estimate the average yearly cost for all post-secondary intuitions to be around $19,300. Costs vary between private, public and two-year institutions, but the one common factor is that the price of tuition keeps rising.
Taking out student loans is one common way students finance their education, but can later prove to be problematic.
“These are the easiest type of loans to get,” Stern said, adding that they can also be some of the hardest to pay off.
Linda Tegtmeier, assistant director of financial aid and scholarships at Minnesota State University Moorhead also said that taking out loans is often the go-to solution for students who struggle to pay for college.
Some of these students, she said, will end up dropping out instead of facing more debt.
To help further defray the costs associated with obtaining a degree, many students rely on scholarships awarded for good grades, or attend institutions which offer discounted tuition for in-state or reciprocity residents. These students, Stern said, can also benefit from having college savings available.
“People often feel paralyzed when it comes to saving for college,” Stern said. He added that they think that it’s too late to start, or they don’t have enough money to put away. But, he said, getting started later is better than not saving anything.
Tegtmeier agrees, and said that when beginning a college savings account, “It’s never too early, but never too late either… even in the middle and high school years.”
Tegtmeier adds that the most crucial time for savings to be available is during the freshman and sophomore years of college. In their first two years of school, students are less likely to have part-time jobs and often have the added expense of living in the dorms.
She also said that the Minnesota College Savings Plan is “good for families with multiple children” as funds can be transferred from one child to another as the need presents itself.
With a minimum deposit of just $25, the plan aims to make college savings accessible for all Minnesota families.
However, funds saved with the plan do not need to be utilized for attending a Minnesota school. Stern said that this is a common misconception. The plan allows students to use savings at any qualifying institution in the United States, and select schools abroad. The options include public and private colleges and universities, graduate and post-graduate schools, community colleges and some vocational schools.
Additionally, enrollment in the program is not limited to Minnesota residents. It can be utilized by families from anywhere in the country.
The money saved with the plan will also not affect a student’s qualification for financial aid, Stern said.
Upcoming changes to the plan aim to make it even more helpful to college-bound students.
While not yet able to specify what those changes will be, Stern said that they will be made public within the next two months and will affect how funds are invested.
He said that the plan is “already considered one of the best in the country… and these changes will make it even better.”
Tgetmeier also advises parents to consider speaking with a financial expert to explore the best option for their specific needs and goals. She added that college saving plans are “definitely not one size fits all.”
More information on the Minnesota College Savings Plan, and how families can get started, can be found on the program’s website or by calling 1-866-338-4646.