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Jeffrey D. Allred, Deseret News
Keri McAffee works on pronunciation with her 4-yr-old daughter Avery at their home in Salt Lake City Thursday, Oct. 11, 2012. McAffee is a single mother.
Between savings, scholarships, loans and if she got a summer job to help pay a little bit, the costs should be covered. —Keri McAfee

SALT LAKE CITY — For many families, among the proudest moments for parents is when their children go off to college. And while getting a degree takes hard work and discipline, many don't realize that an equal or greater amount of work and discipline is required to be in a position to pay for it.

Native Utahns Jackie and Shauna Robertson understand the principle.

Jackie Robertson is a human resource professional, Shauna Robertson is a justice court judge. Long before becoming the parents of three high-achieving daughters and before their salaries started to climb they discussed saving for college. Two principles emerged: sacrifice and planning.

“We started identifying areas in which we could save some money,” Jackie Robertson said. Those areas included buying savings bonds, certificates of deposit and enlisting the help of a financial planner.

“Each child had accounts … savings, CD’s, etc.,” Shauna Robertson said.  “And there is a (common) pot for all of their in-school needs.”

The cost of getting a college education has increased steadily over the past three decades, and so has the rate of debt incurred by students.

According to the National Center for Education Statistics, the cost of tuition, room and board for a public 4-year institution during the 1980-81 academic year was $2,550, while the cost for a 2-year school was $2,027.

Within 10 years tuition costs skyrocketed 106 percent to $5,243 for a public 4-year school and up 71 percent to $3,467 for 2-year school. 

Fast-forward to the 2010-11 school year.  Average college costs have risen to $15,918 a year for 4-year public schools and $8,085 at 2-year schools. That's  a 524 percent increase during the past three decades for a 4-year school.

Comparatively, tuition costs at private 4-year institutions soared 483 percent over the same time frame from $5,594 in 1980-01 to $32 ,617 in 2010-11.

The Robertson’s eldest daughter Jacquenita, 23, is pursuing a doctorate in Pharmacology, while their middle child, Jordan, 19, is in her second year of college. Both attend out-of-state institutions — one public, one private.

The youngest daughter, Joei, 17, is expecting to enroll in college next fall — possibly at an Ivy League school.

With three kids in college simultaneously, maintaining the same level of savings will become more challenging, but the practices put in place two decades ago remain sound.

The Robertsons’ said they hoped to save enough money through the various accounts to pay for a majority of their kids’ college expenses, with the balance coming from scholarships earned by the children. Thus far, the plan has worked well — paying approximately half for Jacquenita and about 75 percent for Jordan.

Make a plan

Having started over 20 years ago, they were smart for taking such a proactive approach, said Jeff Solomon, financial adviser with Edward Jones Investments.

He suggests that parents consider college savings plans that offer distinct tax advantages, such as the Utah Educational Savings Plan — a nonprofit 529 college savings plan designed to encourage individuals and families to begin saving for the future costs of higher education. (http://www.uesp.org/)

According to the U.S. Securities and Exchange Commission, 529 plans — known legally as “qualified tuition plans” — are sponsored by states, state agencies or educational institutions and are authorized by Section 529 of the Internal Revenue Code.

There are two types of 529 plans: pre-paid tuition plans and college savings plans. All 50 states sponsor at least one type of 529 plan. In addition, some private colleges and universities sponsor a pre-paid tuition plan.

Pre-paid tuition plans generally allow college savers to purchase units or credits at participating colleges and universities for future tuition and, in some cases, room and board. Most prepaid tuition plans are sponsored by state governments and have residency requirements. Many state governments guarantee investments in pre-paid tuition plans that they sponsor.

You don't have to be rich to save

Single Salt Lake mom and registered nurse, Keri McAfee, adopted her 4-year-old daughter Avery from China as an infant. As a condition of the adoption, she signed a form stating that she would “pay for or plan for (Avery’s) college education.”

Currently, McAfee, 44, has established a savings account and also plans to open an UESP account as well, in addition to working with a financial planner. She also said her parents are helping to contribute to their granddaughter’s future education nest egg.

“My parents are very pro education,” she said. “They have said they would be happy to pay more money if one their grandkids expressed (interest in college).”

Grandparents or extended family members — or simply those who support education — can participate in the savings plans.  And financial planners suggest planning means taking a look a your situation and making the best choices.

College savings plans generally permit a college saver (also called the “account holder”) to establish an account for a student (the “beneficiary”) for the purpose of paying the beneficiary’s eligible college expenses. An account holder may typically choose among several investment options for his or her contributions, which the college savings plan invests on behalf of the account holder.

Investment options often include stock mutual funds, bond mutual funds, and money market funds, as well as, age-based portfolios that automatically shift toward more conservative investments as the beneficiary gets closer to college age. Withdrawals from college savings plans can generally be used at any college or university. 

According to UESP spokesperson Diane Johnson, funds in an UESP account can be used for qualified higher education expenses, including tuition and fees, books, supplies, and equipment required for enrollment or attendance, room and board for students who are enrolled at least half-time.

Funds can be used at any college, university or technical and trade school that participates in federal financial aid programs for students not only institutions in Utah, but throughout the U.S. or abroad. And you do not have to be a Utah resident to save with UESP.

Save a little every month

“UESP is designed to fit any family’s budget, so you can open the account with (no money) and contribute as you like,” Johnson explained. “Funds are growing tax-deferred (both state and federal) while they are in the program. When they are used for qualified education expenses, they are tax free.”

She noted that Utah residents could also receive a state income tax credit per qualified (student) as well as an added benefit.

Among the more highly regarded state plans nationwide, UESP manages more than 208,000 accounts and $4.9 billion. The accounts can be established from any state in the country, Johnson said, “not just Utah.”

McAfee said she has yet to set a particular dollar amount as a savings goal because, “It’s hard to know what the costs will be.”

With the diverse portfolio of savings vehicles, she expects to supplement whatever assistance her daughter is able to garner when the time for college arrives.

“I figure I’m going to rely on the (various) sources and we’re hoping she can get some scholarships and/or financial aid to pay for her college,” McAfee said. “Between savings, scholarships, loans and if she got a summer job to help pay a little bit, the costs should be covered.”

Saving money is a choice

For the Robertsons, the sacrifices became a part of the family lifestyle.

While they still wanted to the typical family entertainment activities together, they did so in a frugal way  to save money wherever they could.

“We liked to do things like go to the movies,” Judge Robertson explained. “We said that instead of going to first run movies, the only movies we’re going to see will be at the “dollar” theaters. And we even cut that further by going on Mondays when it was only 75 cents.”

Rather than spend $50 to $60 per outing two or three times per month, they saved over $100 monthly on movies alone.When they went to theater performances, they sat in the balcony rather than on the main floor in the orchestra pit and used the kids student ID’s to get any available discounts.

“We’re still doing some of the same things, but at a much lower cost,” she said.

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Regarding family vacations, instead of going on several trips during the year, they would take one annual family vacation.

“It’s a gift that we give ourselves and our children … since 2003,” Robertson said. “The little “side” trips, we don’t do.”

By making the sacrifices, they still did fun things together, but chose to do those activities in a way that would benefit the family’s long-term educational goals, she said. The family saved thousands of dollars over the years, and today the children are reaping the rewards, she said.

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