Saving for college has always stressed me out. We put money away every month, but I’ve known for a while that it won’t be enough to make a dent in US tuition costs. I read an article that said, of families saving for college, the average amount saved is $15,346. Given that 4 years of tuition alone averages between $37,640 (public, in-state) and $129,620 (private), I’m not the only one who is falling short in the college savings department! Financial advisors know that it’s farfetched to suggest that parents have enough saved for the full 4 years of college, but they recommend that families plan to have at least 1/3 of the total tuition saved, and fund the remaining 2/3 with current income, financial aid and loans. Given that many of us are still paying off our own student loans, the thought of incurring more debt is not appealing.
Tuition costs in Europe are dramatically lower – even for international students, so you might be surprised at how close you are to having enough socked away already. I know we were! The average cost of the English-taught programs we surveyed is $7,291 a year, with 533 programs coming in under 5,000€ ($5,762) per year. Further, most programs take just 3 years to complete! Even with housing and travel factored in, you will likely pay less than you would for a public, in-state school. However, it’s still more than most of us could write a check for, especially with other costs like proof of means to consider, so I thought it would be useful to look at different funding options.
College Savings in a 529 Plan
A question from a member parent spurred my research into this. We have two college funds set up for both of our kids and one is a 529 plan. This parent is in a similar situation and inquired about whether 529 funds could be used in for a school in Europe. Funds inside a 529 plan can be used at any school that accepts US financial aid or loans.
We show this in our database by listing the FAFSA number, which is a number that will be written on the US financial aid application. Schools will have a FAFSA number if they accept US loans. Some schools in Europe, especially the more expensive American colleges, also accept Pell grants.
My son, Sam, is super excited about going to school in Europe (or as much as a 15-year-old boy will ever admit to being excited about anything…). Though he is just 15, he already has his eye on a few schools. I immediately signed onto the database to check the FAFSA status at those schools. One accepts it and the other two don’t. So what happens if we can’t use our 529 money for an accepted school? I read something about taxes and a 10% penalty and started to get nervous. Then I saw that the taxes and penalty are only on the gain the original investment earned, not on the amount we’d put in. Since the earnings are not that impressive of an amount, I was able to relax. For now we plan to start saving in a different account and figure out what to do about the 529 money when we learn where Sam will go to school. We’ll also discuss the tax ramifications with our tax advisor. There are choices like using it for another child/family member, using it to buy a computer (this a new use for 529 money this year) or using it for graduate school. Shifting the 529 to another child can be a good option when there is a younger sibling, but then leaves you without the money you saved for the older child.
Good News about Scholarships
Many schools offer tuition waivers and scholarships for international students that are either need-based, merit-based, or a combination of the two. These may be a small tuition reduction all the way up to a full scholarship that includes housing costs as well. Sciences Po, for instance, offers the Emile Boutmy Scholarship for international students, which ranges from 3,000€ per year (for all 3 years) to 7300€ a year for tuition as well as 5000€ a year for part of housing (also for all three years).
Some of the American schools with American size tuition, may also be within reach by using scholarship options. At the American University of Paris, IB diploma holders are automatically awarded an IB scholarship of between 5000-20,000€ per year, based on their IB diploma score. They also offer merit and need-based opportunities to all students of up to 75% of tuition costs.
There are scholarship and aid options for international students outside of specific schools, as well. One example is the Holland Scholarship (5000€), which is available for international students studying in the Netherlands. Students in France are eligible for CAF, which provides them with about 100€ per month to go towards housing. Scholarships for Development has a comprehensive list of scholarship options for international students, though some effort in weeding through them is required.
I’ve felt more optimistic about paying for college ever since I discovered the option of college in Europe. I feel even better knowing about the options to supplement, if needed. Though ideally the lower tuition and scholarship options will be enough for many families, there is also the option of taking out federal students loans for the schools that participate with FAFSA.
How We Can Help You
You can engage Beyond the States to help you find a school that fits all of your needs, financial and otherwise, as part of our consulting services. These can be purchased stand-alone, if you’ve already selected a school or along with a membership. Visit our Services page to learn more.
Resource: IRS 529 FAQ