College Planning and Your Financial Plan
Want the short version?
Here it is. Unless you are making a very comfortable living where your income is much higher than your expenses, you cannot save enough money for your child to have a full ride to anywhere but the cheapest public schools. Sucks, huh? Nothing drops more jaws in my office than explaining to clients the reality of providing a college education for their children. Sure, retirement planning numbers can be daunting, but nothing compares to the harsh reality of paying for college.
I can't tell you how many people I've seen who think that saving $100, $200, or even $300 a month from birth to age 18 will provide a full ride to any school this side of Harvard. Sorry, but it just won't.
The first shock tends to be at how much college costs these days. Poke around the website of some schools that pop into your mind. Check the local state school, your alma matter, even Harvard.
- Cost for One Year Tuition and Fees (Does not include books or room and board)
- University of Colorado (Resident) = $6,635
- Notre Dame = $35,190
- University of Michigan (Resident) = $5,129
- Stanford University = $34,800
- Harvard University = $31,456
So if we do some math (or if you used an online calculator before you got to me), you might have come up with $300 per month for 216 months earning 10% gets you $180,168.96 or around $45,000 per year.
Looking at the list above, that's not bad. Sounds pretty good, right?
Here's the bad news. College costs are currently rising at approximately 7% a year. So, that $6,000-ish annual tuition number becomes $20,000-ish in 18 years. That $30,000-ish number becomes a mind numbing $100,000-ish annual bill. Yikes!
Still, there are smart moves to be made. These articles will help you make them.
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