There is a way parents can afford to send their kids to college without emptying their savings accounts.
Currently, college is a major expense on par with purchasing a car or saving for a down-payment on a home. College tuition now averages more than $30,000 per year at a private university and $22,000 per year at a public school for out-of-state students. It has gotten so bad parents have begun to wonder if sending their son or daughter to college will have to come at the expense of critical long-term planning such as saving for retirement.
At the same time college costs have spiraled out of control, per-pupil spending in K-12 public schools has reached a record of more than $12,000 per year. Spending is higher than it’s ever been, but student performance is not. The recently released National Assessment of Educational Progress report card for the nation’s 12th grade students revealed that high school seniors today read no better than those of the 1970s. Just 38 percent are proficient in reading; 26 percent are proficient in math.
In states across the country, K-12 public school spending is up but achievement is flat. And if students leave their high schools prepared to go to college, they find themselves faced with costs that are daunting, if not prohibitively expensive.
But what if there were a way to help with the problems that plague both our K-12 system and our higher education system? The answer to the college cost conundrum may lie in part with the pioneering K-12 education savings account program in Arizona.
In 2011 Arizona created the Empowerment Scholarship Account program, establishing education savings accounts for eligible families. Families can choose to withdraw their children from their assigned public school or public charter school and have 90 percent of what the state would have spent on their child in the public system deposited into an ESA. Funds are deposited onto a parent-controlled debit card and can be used to pay for education-related services or products.
Families in Arizona’s ESA program can use their funds to pay for private school tuition, online learning, special education services, curricula, textbooks and a host of other approved expenses. But here’s what makes this approach to school choice particularly innovative: Families can even roll over unused funds into a college savings account every year.
During the 2011-12 school year, approximately 34 percent of families used their ESAs to finance multiple education services and products, customizing their children’s education. And notably, parents rolled over 26 percent of the funds deposited into their ESAs, in anticipation of future education-related expenses.
Cumulative college debt now exceeds $1 trillion—more than cumulative credit card debt—and represents three times what students owed a decade ago. The ability for parents to roll unused K-12 funds into a college savings account has the potential to save tremendous amounts of money for students and their parents when it comes to financing college. It could potentially save a significant amount for taxpayers as well, who would benefit from a reduction in state and federal higher education spending on subsidized student loans and Pell grants.
Taxpayers cannot afford to continue financing an open spigot of federal higher education spending. Particularly when such spending serves only to drive up college costs by enabling universities to raise tuition.
Innovative school choice options such as education savings accounts are enabling families to completely customize their children’s K-12 education. And they have the added benefit of helping families save for college. As more states consider adopting ESAs, the K-12 savings accounts could be one way to alleviate the college cost burden for parents and taxpayers.