Feb 25, 2011

Price of higher education. Cost of higher ignorance. & Funding college now - 529.

There’s a lot of noise about the higher education bubble – like it’s not worth going to college anymore.

Though the price of education is expensive, the price of ignorance is even more. So, there are quantitative and qualitative differences. There’s the pay and considerations for advancement but there are other things i.e. perspective, attitude and confidence.

All things being equal, the college grad will be given more opportunities for entry and advancement because those credentials reflect certain qualities e.g. mental ability, diligence, discipline, industry among others.

Going back to the bubble, I think it is not in the community and state colleges because those are relatively inexpensive. And the ivy leagues will still be worth it depending on the program because if you’re a Wharton MBA or a Harvard Law graduate, then all the Fortune 500 companies will roll out the red carpet and pay you more than enough to recoup your investment. The bubble is in expensive private colleges or programs that are not that marketable.

Bottom line, if one can afford the time then there are economical ways to fund higher education e.g. grants, loans, scholarships and savings programs. An example of a saving program is the 529 account where contributions can be deducted from state taxes and the benefits can be transferred to another beneficiary – just in case your kid gets a scholarship and you can give it to someone else. The concept is like an IRA but even better because one can purchase a 2 or 4 year degree program at the current rate to use 18 years from now. Also, in the 529 program, one can opt to invest the money in a funds and hope that it grows as fast as the cost of education and not have any financial meltdowns that can wipe away the savings. I would go with paying for the tuition at today’s rate and having that program ready – to shield it from the market volatilities. I guess the risk there is if the state goes bankrupt. Anyway, this post is meant as a guide or pointer to explore the 529 programs. It varies by the state.

(If this helps, kindly say a prayer for my family. Thanks and God bless.)

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