The first thing parents usually think of when setting up a savings account for their child’s college education is the cost of college tuition. No matter what school your child attends, college tuition will always be one of the biggest college expenses. However, it’s easy to forget the other expenses associated with a college education. Ideally, parents should factor in all of this information into their savings plan to avoid getting stuck with unexpected costs.
Room and Board
Whether a student decides to live on campus or not, room and board will be a substantial part of a student’s budget beyond their college tuition. In fact, it can often be just as much, if not even more, than the total amount of college tuition and fees! For example, total tuition and fees for the 2017-2018 school year for an undergraduate attending the University of California, Los Angeles (UCLA) is estimated at $13,260, while the estimated cost of room and board is $15,143. This is not uncommon and parents should take this into consideration when saving for their child’s college education.
Most college savings accounts allow for funds to only be used for qualified expenses and, in most cases, that does not include housing that is off campus. However, a College Savings Trust will cover all housing expenses for a college student, including rent and dues for a fraternity or sorority, and living in an apartment off campus.
Textbooks and Supplies
Another major expense for college students is purchasing required books and coursework materials for class. Depending on the types of courses that are being taken, some teachers will also require a workbook and software to go along with the textbook. Students can easily spend over $1,000 on books and related materials in a school year.
For students without funds in a college savings account, these expenses can be sudden and overwhelming. Students are often forced to purchase the materials needed for class with a high-interest credit card if they have no cash on hand. Fortunately, funds from a College Savings Trust can be used to purchase books and other needed supplies without having to guess if they are qualified expenses or not.
Some students will choose to attend college in another state or even in a different country. Travel costs between school and home can be pricey, especially during the holidays. Also, a semester abroad is something many students seek out as part of their college experience. There is almost always an extra cost associated with travel and room and board with this choice of elective. These are expenses that many parents forget to factor into their savings strategy.
Even if a student goes to school close to home, there are other transportation expenses such as gas and car maintenance that will add up over time, which many of the different types of college savings accounts will not fund. Funds from a College Savings Trust can easily be used to cover these costs.
Social Activities and Sports Fees
Parents can agree that college is an ideal time for students to expand their social circles and meet new people. An important piece of that is joining different clubs on campus, becoming a member of a Greek society, playing intramural sports, or even just participating in the various activities offered by the school. However, being active on campus can lead to unexpected expenses for equipment and membership dues.
A 529 college savings plan, for example, does not consider these types of expenses to be qualified, so students will have to pay out of pocket for most of these fees. However, a College Savings Trust allows funds to be used for these purposes so parents can feel secure knowing their child’s college savings will cover a wider range of activities. Additionally, parents have the option to approve or deny payment requests from the College Savings Trust. If the fee is something parents feel is not within the budget, they have control over whether or not the disbursement is approved.
Medical and Health Costs
There is always the possibility that unanticipated health or medical costs can come up while a child is away at college. Of course, parents never want to experience this kind of occurrence, but it’s best to plan and be prepared for unexpected illnesses or accidents just to be safe. A College Savings Trust provides the flexibility to use funds to help with these situations.
Although many colleges offer a simple health plan for students attending the school, some parents choose to invest in additional health insurance for things that are not covered by these basic student plans. This is also something a College Savings Trust can be used for, unlike a 529 plan or other types of college savings accounts.
The first step in planning for a child’s college education is choosing the right savings account that aligns with your goals. Part of that is factoring in what types of expenses you anticipate and knowing which account offers the ability to cover those costs without being penalized for using the funds for unqualified expenses. A College Savings Trust not only pays for college tuition, but offers the flexibility to use the money for the abundance of extra expenses that come with being a college student. College isn’t always predictable, but a College Savings Trust takes the guessing out of the equation and provides a secure and professionally managed way to fund your child’s college education.