Understanding the world of post-high school education savings

It’s never too late or too early to start investing in the future of the kids we love. No matter where you are financially or what educational path your child takes, an education savings plan can help give you the best chance to enrich the lives of your most cherished family members.

Benefits of a higher education

We all know the importance of an education, and the numbers back it up. Simply put, a higher education offers better job security and an increase in earnings potential. Consider this data from the US Bureau of Labor Statistics.

• Average income increases based on level of education (for people over 25)¹:

- High school diploma: $38,000
- Vocational school: $42,000
- Associate degree: $45,000
- Bachelor’s degree: $62,000
- Master’s degree: $75,000

• The unemployment rate decreases as level of education rises, from 4.1% among high school graduates to 2.1% among those with a postgraduate education.

Total cost of an education

There are different types of post-high school education programs, each with their own range of expenses. While everyone considers the price of tuition per year, other costs like books, supplies, housing, meals, and transportation need to be factored in as well. The type of school will also affect total costs, based on options like vocational schools, public/private schools, in-state/out-of-state schools, and more. Total expenses can range from $9,000 (for a vocational school) to over $50,000 (for a private four-year college). While you might not know what kind of school your child will choose, an education savings plan will prepare them for any type of post-high school education.

Of all the available data on getting a post-high school education, one fact remains certain: Tuition increases 3% to 5% annually.² That might not seem like a lot, but consider that increase over the course of 18 years, not including the other costs of an education. With the ever-rising cost of a post-high school education, you’ll be able to give your child a bigger boost in college savings if you start an education savings plan early. 

Building an education savings plan for your family

There are many ways to plan and invest in the future of your child. A thoughtful savings plan is achievable on any budget. Whether you want to plan on your own or get help from a financial professional, here are a few things you can do now:

• Assess your financial health. Take inventory of your personal and professional goals to see how much of your savings you can invest in an education plan. 
• Connect with resources. There’s a wealth of information available from financial websites, government resources, or financial professionals.

The bottom line is this: Less than half of American families have a plan for education savings. Families that plan borrow significantly less money than non-planners. Learn more about the opportunities for saving for college and equip your kids with the tools they need to build a bright future.