January 25, 2018

Your Child’s Roadmap May Not Always Lead to a Traditional College Education

The significance of a college education today is undeniable, but it’s important that parents keep in mind that not all kids will choose to attend a traditional four-year college after high school graduation. Sometimes they may choose to focus on a career path that doesn’t require the coursework that is part of traditional college curriculum. Additionally, some people can become overwhelmed and unmotivated by an educational structure involving subjects in which they have little interest. For some kids, vocational programs and trade schools provide an excellent alternative route.


What is a Trade School?

A trade or vocational school is an educational institution that offers courses pertaining to a particular career field with the goal of making graduates immediately workforce-ready for a specific occupation. People who choose to go down this post-secondary path do not have to take general education courses or prerequisites before starting work-specific classes. Examples of these types of trade programs include computer and IT, health and medical, cosmetology, culinary, automotive, criminal justice, real estate, teaching, caregiving, nursing, and construction trade schools. Once completed, graduates typically earn a certificate of completion or license rather than a degree, although some trade schools do offer an associate degree as well.

For many employers, a college degree is a must. It shows that a graduate has a well-rounded foundation in a wide range of subjects and critical thinking. But for certain businesses, it can actually be beneficial for employers to hire individuals specifically trained for the positions they’re filling. Skilled trade workers are in high demand in many of these industries and can earn a great livelihood with fulfilling careers.


Cost to Attend Trade School

Expenses to attend trade schools are generally not as high as traditional colleges, but it really depends on the industry focus and the length of time it takes to complete the program. Most trade programs are designed to get graduates into the workforce quickly, so they range anywhere from six months to two years. The cost of tuition and supplies can be as low as $3,000 and as high as $30,000 or more to complete the program.

While trade schools are typically not as pricey as a four-year university, this doesn’t mean that parents shouldn’t save for these situations as well. We covered in the past how college is more than just tuition, as there is an abundance of expenses that come with a college education. In addition to tuition, there are other expenses such as books, supplies, tools, administrative fees, transportation, living expenses and admissions test preparation that are all part of a trade school education. Not to mention costs associated with professional licensing and insurance upon graduation. The best option is to utilize a college savings plan that offers the flexibility to cover these expenses without being penalized.


Can Funds in a College Savings Account be Used for Trade Schools?

Parents who have made significant contributions towards a college savings account may find the idea of their child skipping college worrisome for numerous reasons. If your child doesn’t attend a traditional college, what does that mean for funds in your college savings account? Many college savings accounts, including a 529 plan, can only be used for qualified schools. Parents will be taxed and penalized when using the money for anything other than an accredited college education.

A College Savings Trust is very different from a 529 account in this way. The funds in a College Savings Trust can easily be used for a variety of post-secondary education options, including trade schools and licensing programs, with no penalties. This means your child has more choices when it comes to a future career path. The more interest and enthusiasm students have for the classes they take, the more likely they are to graduate and quickly seek out a job in that field. This is why flexibility is so important when it comes to how college savings funds can be used.


What if Post-Secondary Education Isn’t in the Cards?

Because there’s no way of knowing what path your child will take after high school, it’s always a good idea to plan for the best. A College Savings Trust is an ideal way to save for your child’s college education while still having the security of knowing these funds can, if needed, be used towards a license or certificate program at a trade or other vocational school.

Some high school graduates have a strong entrepreneurial spirit and prefer to dive right into a sound business venture. There are also cases where parents own a company and a student will choose to work for the family business immediately after graduation. In these cases, money in a College Savings Trust can be used to fund reasonable business ventures or even pay for basic living or healthcare expenses with no penalties. A Coverdell ESA or 529 savings account will not cover any of these costs and, in fact, would tax, fine and penalize you.

Although there is no guarantee your child will attend college in the future, there are different avenues people can explore that will lead to well-paying jobs and fulfilling careers. Knowing these options and whether or not your college savings plan will cover them is something parents should consider when setting up a savings account for their child’s education.

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