Affording College

One of the biggest financial worries that plague parents across the land is college tuition. You know it"s coming from the first time you see those two pink lines, and it is reiterated during the first ultrasound. By the time your little one hits high school, it"s all you can think about.

If your child lives at home during the college years, you"re looking at spending at least $40,000 for the four year course in an average college. Private colleges can cost twice as much, and attending a college out of state will cost about $80,000 total. That"s not accounting for the Ivy League schools, or for the education after four years, like grad school. If your child lives in a dorm, you can count on adding another $24,000 or so to your total. And if your child lives in an apartment or a house off campus, it could be anywhere from $2400 to $12,000 more a year. Are you scared yet?

Well, there are some things you can do to help yourself out. Start saving now when your child is little. One year old Suzie will appreciate the money in her savings account when she gets old enough to need it. Start investing money early, so that the funds have time to grow. Invest aggressively at first, and then taper off as your child gets older. As a rule of thumb, you want to have 40% of the anticipated tuition saved up before your child receives an acceptance letter. In rough figures, you"re looking at saving $25,000 total for an average college and a dorm room. That breaks down to about $1400 a year, or a little over $100 a month.

If your child is intent on going to Harvard, you may want to save more. And of course it"s okay to save more than the recommended 40% -- the more you have on D-Day the better. And on the off chance that you manage to save more than you need to pay for college (after all, your little football star could get a full ride), then you"ll have the money for something else, like a new car or home improvements, or tuition for one of your other children who ends up double majoring at Yale.

Look carefully into your options. Some employers offers college tuition options, letting you set aside part of your paycheck (or part of your teenager"s paycheck) to use towards college. Certain states, Florida for instance, have a prepaid system set up. As soon as your child is born, you can start putting money into a fund that pays for college. All the money is yours, and it doesn"t accrue interest, but it has one major benefi; the tuition fees you would pay to send a child to college in 2007 are locked in place. That means that in 2025 you"ll be paying the tuition rates of 2007. You can save a lot of money with programs like that.

Scholarships, grants, and financial aid will help pay for the tuition, so have your child do their part. Make sure they keep their grades up and take the right classes. Encourage them to be involved in extra curricular activities that look good on a college application.

College tuition is a scary thing, but as long as you start saving early on in your child"s life, and keep your options open, your child should get the education they need and deserve.

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