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Friday, August 17, 2012

Nashua financial planner shares tips for college spending

NASHUA – The cost of higher education in New Hampshire can be daunting.

During the past decade at UNH, the cost of attendance rose 147 percent for in-state students and 113 percent for out-of-state students. At Plymouth State University and Keene State College, the 15-year increases were more than 130 percent for in-state students and more than 100 percent for out-of-staters.

This fall, the “sticker price” at UNH is $26,186 for in-state students and $38,646 for out-of-staters, the highest it’s ever been. Meanwhile, New Hampshire graduates earn the distinction of having the highest student debt load in the country at $31,048.

Nashua financial planner Todd Leo said that while the price of college is enough to make any family concerned about their ability to pay, the right planning can make all the difference.

Leo shared some of his best college savings and student debt management tips with The Telegraph.

1. Start early.

“You’d be amazed how money can grow if you just start saving early,” Leo said.

Leo suggests using money received at baby showers, children’s birthdays, baptisms and other similar events to get the savings started. Saving just $100 a month over a child’s youth can amount to about $40,000 by the time they’re ready to go to college, depending on the savings plan used.

2. Use a 529 plan.

Leo recommends a 529 College Savings Plan because the savings remain in the parents’ or guardians’ names.

“The mistake some make is having large savings in a child’s name, and then when that child goes to get financial aid, it can disqualify them,” Leo said.

Keeping college savings in the names of parents, he said, is also helpful if a teen decides not to pursue higher education. Savings in 529 plans can be transferred to a sibling or another relative to help pay for their college costs, he said.

3. Start small and build up.

“It can seem daunting,” Leo said of saving. “But what I try to tell people is that building up to saving higher amounts is better than not starting anything.”

If young parents can only save $50 a month for college, he said, they should do so. Then, if their financial situation becomes more stable in future years, they can build up to saving more each month.

Having any money at all in the bank when a child is heading to college is important, he said.

4. Seek advice.

For college graduates who are facing large amounts of student loan debt, Leo suggested learning their options for repayment is important.

Most financial planners offer free, one-time planning sessions, he said, which can be enough to get a young professional started toward a stronger financial future. Young parents beginning to save also can benefit from a visit, he said.

5. Get into the workforce.

Leo said that while many graduates today are looking to earn a master’s degree, moving from an undergraduate program directly into a graduate program is not always the best option.

Getting work experience early on is crucial for future employment, Leo said, and many employers offer some kind of education reimbursement plan that can help pay for graduate school.

Leo said that following these tips can help families be better prepared when college comes around.

Still, he said it’s important to remember that what works for one family may not work for another, and that working to determine all college savings options is key.

“Most people’s situations are unique,” he said. “I don’t have two clients that are alike.”

Danielle Curtis can be reached at 594-6557 or dcurtis@nashua telegraph.com. Also, follow Curtis on Twitter (Telegraph_DC).