Part 1: Beginning to Think About College for Children

Tuesday, November 10 at 08:50 AM
Category: Personal Finance

This is part one in a two-part series on the rising costs of college and ways to make saving for college easier.

As you probably know, college is expensive. As you may not know, college costs are rising faster than inflation and almost no one is predicting that college costs are going to go down. As a result, you may want to start thinking about funding your children’s college costs now. The sooner you start thinking (and hopefully saving) the easier it will be.
College Costs Today
According to the College Board, the annual costs (tuition, room, board, books, supplies, transportation, and other) of attending college for 2013 - 2014 were about:
  • Four year private college - $45,000
  • Four year public college for an in-state resident - $23,000
  • Four year public college for an out-of-state resident - $36,000
While many students qualify for scholarships and other forms of financial aid to bring these numbers down, you may also want to consider some of the other costs (travel, entertainment) that may add to these numbers.
College Costs Tomorrow
For the past several years, college costs have been increasing at a rate faster than the overall inflation rate. While it is impossible to know what will happen in the future, here is a chart that demonstrates what happens at annual increases of 4 percent.

And do not forget, these are just the annual costs; also, if your child attends for four years, you must multiple by four. As you can see, it will be expensive to send your child to college and even more expensive if you have more than one child. Fortunately, you have time to save and there are several ways the income tax laws make saving easier. Stay tuned for part two of this blog which will delve into some of the college savings options. 
Tags: College, Financial Education
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