Tackling College Savings Issues

So how are you doing for saving college education for your kids? A recent survey shows that the ones who are saving are cutting back due to tough economic times. The survey also asked parents what they felt public college, as well as private college, tuition would cost. Of the parents surveyed, 57% thought that college would cost up to $15,000 for a public school; 67% thought that a private college would cost up to $25,000 a year.

Well, apparently there is a little misinformation. Let’s talk about some real numbers as well as what you would have to save today if your child is 10 or younger.

According to Finaid.org, the cost of a public school costs $17,336 a year and $35,374 a year for students at a four-year private college.

If that is not bad enough, it is the inflation rate that makes sending your child to college so expensive. Since 1971, the average inflation rate has been 7.7% per year. The good news is that today, it is estimated to be around 5 to 6%. That 7.7% figure took into consideration the inflation filled years of the 70’s.

So, how are you going to tackle those big costs? I think that every parent wants to put their child through college. At the same time, it is important to really figure out how that is going to happen. It is extremely expensive and takes a pretty big monthly investment to pull it off.

For instance, if you had a 2 year old and you knew you wanted to put your 2 year old through a 4 year private college, it would take a monthly savings of $792.66 to handle that cost. For a public college it would take a monthly savings of $388.47.

For a 5 year old, you better start saving $985 a month for a private school and $482 a month for public education. As you can imagine, those numbers just get larger.

For a chart of approximate monthly savings for children ages 1 through 10, click through to this article.

So, how do you tackle this objective? It is important to put a game plan together and determine how much you are willing to cover of those expenses and how much you expect your child to pay for either through working or student loans.

If you start saving for college and it is your plan to pay for the whole thing, determine ahead of time what other goal that is going to compromise.

Be realistic about how you are going to fund college for your kids and to what level. This is a planning event that needs to take place way ahead of time. In the event that you don’t have the luxury to pay for all of the college costs, then start preparing your child now and start figuring out how college will be paid for. This can be great incentive for better grades and/or for your child to get a part-time job to help out with costs.

Now in the event that college is going to be paid for by the use of a loan, make sure you educate your child on how the student loan works and the awesome responsibility and liability that awaits them down the road.

If you as a parent are going to borrow for college, make sure that you have a game plan to pay that loan back and that it doesn’t become a problem.

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