Joseph Pisani of CNBC News reports that the cost to attend a four-year nonprofit private college increased 4.3% for the 2009-2010 academic year, bringing the average annual price to $35,636. Meanwhile, during the last 12 months, the Consumer Price Index (a measure of inflation) actually fell 1.3%.


Shockingly, the cost to attend a public college grew at an even greater rate. Public in-state college costs climbed 5.9%, with the average cost reaching $15,213. Out-of-state students watched their costs rise 6% to $26,741, according to the College Board, a non-profit association of schools, colleges and universities. (All costs include tuition, fees and room and board.)

Interestingly, poor investment performance may be one reason college costs continue to measurably outpace the rate of inflation. Many schools are suffering significant losses in their endowments as a result of the current financial crisis. Some of the largest endowments in the country including places like Harvard, Princeton and even the University of Michigan have experienced declines of over 20 percent during the fiscal year that ended June 30, 2009.

However, Benjamin Franklin's words still hold true: "an investment in education pays the best interest." As a matter of fact, over a lifetime a high school graduate earns an average of $1.2 million, while a college graduate earns $2.1 million (in current dollars). Therefore, it's more important than ever to adequately plan for college tuition expenses. Work with an independent fee-only financial advisor to ensure you are taking the right steps to ensure your investments are ready when your student is.

Financial Planning Tips

Good advice never goes out of style.

Things to do:

• Have a financial plan showing where you want to be and how you will get there.
• Develop an investment policy statement describing how you will make investment decisions to help prevent you from making emotionally-charged investment decisions.
• Whenever possible, invest often. Consider a systematic investment plan. This forces dollar-cost averaging.
• Work with a financial professional who is compensated to provide objective advice, not an advisor who's paid to sell products.
• Identify your risk tolerance before the next market drop, and have an asset allocation targeting that risk tolerance.
• Be truly diversified including large, mid, small, international, growth, and value stocks in you portfolio. Invest in corporate bonds, government bonds and international bonds.
• Make your asset allocation more conservative as you approach retirement.
• Rebalance your portfolio at least annually.
• Meet with your financial advisor at least every six months.
• Review and update your financial plan and estate documents at least annually.
• Have some liquidity in your portfolio. Having cash available will reduce your need to sell securities when their values are depleted.
• Take full advantage of the employer match on your 401k. Remember the match is part of your compensation.
  
• Understand the risk/return history and expectations for all your investments.
• Monitor how and how much your investment advisor is compensated.
• WORK WITH A FIDUCIARY - since they are obligated to act in your best interest.

Things not to do:

• Let emotion get the best of you.
• Necessarily trust your financial advisor. Make him or her earn that trust.
• Trust "financial advisors" that encourage you to leverage your home, or push annuity products without mentioning the costs of such products.
• Be enticed by new, short-term investment strategies.
• Work with a financial planner who isn't financially motivated to constantly serve you.
• Neglect estate planning.
• Invest in things you don't understand such as gold, commodities, and options.
• Pay high investment fees or commissions.
• Seek advice from "financial professionals" who work with a limited range of products, such as insurance or annuity salesmen.
• Seek advice from friends and family who are not financial professionals.
• Invest for the long-term without an established emergency fund (3-6 months of expenses).
• Use short-term investments for long-term goals, or vice versa.

Consumer Financial Landscape

In these tough economic times, consumers should be particularly watchful regarding their credit card spending. Many have seen their rates jump up to 25% or more, and their credit lines cut. The credit card firms are defending this practice since they have been hurt in the credit crunch over the last year. Help for consumers may be on the horizon though.

A bill to address these practices in the credit card business was on track for approval by the U.S. Senate with President Obama expected to sign it into law before the end of the month. Enactment of the legislation would mark the crest of a backlash rising for years against the card industry amid sudden interest rate increases, hidden fees and aggressive marketing programs that have angered consumers.

If enacted, it would be the first major financial regulation reform completed by Obama. The bill would limit, but not prohibit, card issuers' ability to raise interest rates on existing balances. It would require 45-day notice of most rate increases; limit rate increases for new accounts and prohibit certain kinds of fees.

In addition, the bill would require more disclosure of the terms of card agreements; require periodic review of a cardholders' interest rate and open the possibility of lowering it. Much of the bill would take effect 9 months after enactment. The bill does not include a cap on interest rates, nor does it bar lenders from issuing cards to college students.

These changes hopefully will lead Americans to be more aware of their spending and in particular more aware of their credit card rates and limits. If you are shopping for a new credit card, there are many great web resources. For example apply for credit card using this link.