College is pretty expensive, as costs vary on factors like financial need, college type and other things. The average cost to attend a private American college for one year is around $45,000 whereas studying at an in-state public school is roughly $23,000 per year.
What You Should Know
Expenses continue to increase year by year. If costs escalate at a rate of 5% annually, the entire cost of 4 years of college are likely to sum up around:
- $464,000 if you choose a private university
- $237,000 for an in-state public university
The amount required to save for pursuing a college degree depends on your family expenses and your income sources. If your child can qualify for a scholarship or some sort of financial income, you may get some relief. However, financial gurus suggest that you should set up a college fund as soon as you become parents.
This way you are going to have adequate funds by the time your little one grows up to be eighteen.
You must decide how much money you can put aside every month to contribute for your child’s college education. Let’s say you have a newborn baby, you have 18 years to save for college. Although, time is on your side, you know that the college fee is going to rise considerably over the next ten years or so.
This means you have to save looking at the future tuition fee and not the current expenses.
What You Should Do
Here are a few things to consider for parents who dread the idea of paying for their children’s college education.
By stashing their money in a 0% interest account, new parents could save $230,000 in 18 years if they manage to set aside $1065 a month
In case your money is kept in an account with an average annual rate of return of 6%, you would have to set aside $500/month to save $230,000 in 18 years
You can save a decent amount even if you can’t seem to save $1000 or $500. For instance,
- $47,000 in 18 years by saving $100/month
- $166,000 in 18 years by saving $250/month
Although, you can encourage teen to take up scholarships or a summer job to make small contributions, you can’t expect them to do much when they are young toddlers.
It’s never too late or early to start saving for your young boy or girl’s college fund. But the earlier you start the better chances you have for a smooth college education. Another great way to continue building your funds is to let your loved ones contribute to an account on a regular basis. This way, you can avoid getting unwanted gifts that have little value in your child’s life.
The Gift of Education allows your friends and family to help you save enough funds for your little one’s future. Thanks to an easy setup, you can create an account in no time to start saving every penny for your child’s college education.