In the President’s speech on college costs Thursday, he proposed ranking colleges and universities based on the amount graduates make and owe in college loans.
Iowa college graduates average more than $28,000 dollars in debt, ranking the state as the sixth highest in the nation.
Statistics show that 69 percent of families only save about $5,000 to help pay for their child’s college education.
“It is a concern of everybody, it is a concern. I deal with families often to talk about their finances and what they can and cannot do and what they should and should not do,” says Tom Delahunt.
Delahunt is Drake University’s Vice President of student financial planning; he says the President’s efforts to reduce student debt are off to a good start.
“I think we’re going in the right direction by asking about outcomes and that will help people decide what is a good investment, how much debt is enough debt.”
However, parents and students can control their amount of debt by planning ahead. Heather Doe with the Iowa College Student Aid Commission says all families should start saving early and start a 529 plan.
“Start it when your kids are young, that`s just going to continue to grow and then you can use those funds tax free for any higher education cost,” says Doe.
The 529 plan is similar in concept to a 401 k, but instead families save money for the child’s college education.
“As you fit more into your budget you can start putting more in but $25 a month can make it pretty easy to get it started,” says Doe.
Another way to cut costs is by earning college credit in high school.
It’s free and it allows students to jump ahead in their college courses.