Plan for your children’s college education

Guiding our children is one of the biggest responsibilities we have as parents. When contemplating their college education, we need to assess several factors. Planning ahead will help us set a successful path.

Parents usually want to provide financial support to their children with their college education. Therefore, it’s important to consider these factors:

• Tuition costs: They can vary significantly between institutions
• Housing
• Miscellaneous expenses such as materials, food, transportation, and parking, among others
• Scholarships and other financial aid

When should I start saving for my children’s college education?

If you are a parent or legal guardian and haven’t started saving yet, now is the time.

Tuition costs continue to increase every year and vary according to the institution and its location. Planning for a college education should be aligned with your expectations and those of your children. You can choose between institutions in the United States or local ones that entail a more affordable budget. There are also international options, which can involve additional expenses as well as the need to procure documents such as a student visa in a foreign territory.

According to the article "What are the Tuition Costs of Ivy League Universities," published on the Study Portals website, in 2024 the average annual tuition cost at a U.S. Ivy League university is over $60,000 —without taking other expenses such as housing and meals into account. On the other hand, the annual tuition cost at the University of Puerto Rico is around $6,000 —and with other incidental expenses it could reach around $20,000 (according to the cost section on the University of Puerto Rico's website).

It is important that you work with your Private Banker and Financial Planner¹ to establish a plan that includes savings alternatives for your children’s education. As part of the analysis, they can make projections and identify an appropriate savings amount for this purpose.

Continuous communication with your Private Banker and your advisors is vital to achieve this goal. Your financial team can help you create strategies through:

• savings accounts
• investment accounts²
• annuities³ whose maturity date can be tied to when your children will need the money, and
• accumulation policies, among other financial products.

You can deduct up to $500 per dependent on your annual income tax return for contributions made to an Educational Savings Account (ESA). Contributions to these savings products are tax deductible, subject to the eligibility requirements of the Puerto Rico Internal Revenue Code.

What to do if my child is admitted to the university of their dreams

Good planning will allow you to have funds to cover most of the expenses associated with your children’s education without sacrificing your retirement savings or other financial goals.

There is a possibility that your child will apply for and obtain a college scholarship based on their academic, athletic, or other talents. If so, you can reassess your plan and validate, considering the funds already saved, how to continue addressing other long-term family financial goals such as retirement, asset protection, disability, or the need for long-term care.

What other factors should I consider if I already have children in college?

All parents long for their children to have financial independence. Therefore, it is crucial that they establish their own credit. Your Private Banker may offer your college student a credit card if he or she is 21 or older⁴. This will be the first step to start building a good credit history. If the student is under 21, the main applicant will always be you (parent or legal guardian) and the student will be the co-applicant, unless he or she is emancipated, and presents an emancipation or marriage certificate. Other requirements may apply depending on the credit product. Additionally, you can include the student as an additional card holder to your existing account. As many choose to study abroad, it is preferable for them to have more than one payment method, which is crucial in case of an emergency.

It is also important that your child gets an ATH debit card with Visa logo so they can use it for purchases and services abroad.

Lastly, it is important that you evaluate how long your child will stay in their apartment or dorm. In some cases, recent graduates get jobs or internships. It’s important that your financial plan includes a post-college “starter” amount. This will be vital for your child’s social integration to the labor market.

At Popular One⁵ our team of professionals is ready to provide guidance on this topic and assist with other services such as managing your finances, investments, and risks. Contact your Private Banker today. Write to popularone@popular.com or call 787-281-7272 Monday through Friday from 8:00 a.m. to 5:00 p.m.