In the UK, the stories of debt and huge overdrafts for students is something we’ve come to expect. Of course, these have grown since tuition fees have been introduced so how do students in the US cope, after all they’ve always had tuition fees to pay. Well it turns out the story is relatively similar, and although Americans are saving more than ever for their further education it isn’t nearly enough.
Most Americans save into something called the ‘529’ plan, so named because of the tax code it is associated with. Although this isn’t the only way to fund a college degree, it is one of the most popular routes. In a recent survey it was discovered that the average value of this fund was approximately $20,000 a sizable amount and up considerably over the last few years. The problem is that in the US this isn’t nearly enough to fund a college education in the vast majority of states.
The rise is of course good news, and is largely due to some increase in tax benefits – the fund is tax free if it’s used for tuition fees. The improvement in the economy has also helped with values of stocks and shares linked to these funds starting to grow more significantly over the recovery. These increases have softened the blow slightly but it still represents a huge shortfall in the real cost of college.
The costs for a college education of course vary significantly depending on where you go and where you study. However even the cheapest costs, tuition fees charged to in-state students, combined with room and board come to $18,000 nearly enough to wipe out the whole fund in less than a year. If you choose an out of state private school then this figure is even higher and a figure double that cost is required.
Most experts consider the costs to be worth the future employment benefits and the fact that funds are rising is good news. Any amount that can be saved reduces the overall costs and means that interest will not be payable on any further debt. It still represents a huge financial risk for students and their parents though which many are having second thoughts about. The problem is that students need to think carefully about their future employment prospects before moving into study. Many courses and skills don’t offer the increased reward that graduates expect.
Lots of people are also starting to consider distance learning, where a degree can still be taken in large reputable universities all over the world. For many you don’t need to change your IP address like this or sign up from specific locations anymore, the courses are truly global. The main advantage is that of cost, they are normally much cheaper for students and they can be taken from home saving on boarding and accommodation costs. There are drawbacks of course, the ‘social element’ is reduced somewhat but many of these courses offer weekends throughout the term when students can get together.