In addition to life insurance, retirement income, and investments, your financial
plan should address other financial scenarios as well, including Education.
The cost of a college education continues to increase at a rate beyond
that of inflation. In fact, according to the College Board, an organization
that studies trends in higher education, tuition has been rising an average
of 4.7 percent each year (for a breakdown of these costs, please see the
Average Annual Costs table). As a result of this increase in cost and limited funding,
it is becoming more and more crucial to begin planning early to ensure
that you apply for all potential funding and take advantage of any scholarships
and other forms of financial aid that may be available.
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Average Annual Costs of a College Education
| |
Four-Year Public (Per Year Cost)
|
Four-Year Private
(Per Year Cost)
|
Four-Year Public (Total Over 4
Years)**
|
Four-Year Private (Total Over 4
Years)**
|
| 1989-90 |
$6,195 |
$16,538 |
$24,780 |
$66,152 |
| 1993-94 |
$7,055 |
$17,980 |
$28,220 |
$71,920 |
| 1997-98 |
$7,678 |
$19,734 |
$30,712 |
$78,972 |
| 2001-02 |
$11,976 |
$26,070 |
$47,904 |
$104,280 |
| 2005-06 |
$15,110 |
$32,913 |
$60,478 |
$131,651 |
| 2010-11 |
$20,233 |
$40,045 |
$80,933 |
$176,179 |
| 2015-16 |
$27,077 |
$58,942 |
$108,306 |
$235,767 |
*Figures from 2001-2002 are from the College Board, New York, NY. Figures
above the year 2001 are based on an average annual increase of 6 percent.
According to The College Board, 2001-2002 tuition was up 5.5 percent from
2000-2001 for private colleges and up 7.7 percent for public institutions.
The exact costs of the school you select may vary.
**Figures assume that tuition remains the same for four complete years;
in actuality, tuition usually increases annually.
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Funding a College Education
Permanent life insurance contains a cash-value element that grows
tax-defferred (with no immediate taxes) inside the contract. Because you
don't have to pay current taxes, your principal remains larger and accumulates
at a higher level.
This cash value can be utilized through loans and withdrawals
that can be used to pay a number of expenses, including funding a college
education.
Plus, loans from life insurance policies never need to be repaid;
if left unpaid, they are simply deducted from the policy's ultimate death
benefit.
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