Estimate the Cost of College in 18 Years
Most college cost estimates assume an annual increase in college tuition and fees based on a 7 percent annual increase. However, some state universities have increased tuition by amounts of up to 35 percent, based on reduced income from state tax dollars. This rate of increase is unsustainable, so it’s safe to assume that college costs won’t increase 35 percent over the next 18 years. College costs have increased at a rate higher than inflation, however. These facts mean that 529 college savings plans are more important than ever before in ensuring your child’s access to a college education. According to Federal statistics, since 1971, college costs have grown an average of 7.7% a year. That figure includes times of very high inflation during the 1970s and 1980s. Therefore, a 7 percent annual increase in costs is a relatively safe estimate.
How Much Will 4 Years of Education Cost at Different Types of Colleges?
Using an annual inflation rate of 7 percent in costs, the current average in-state tuition for a public college or university is approximately $13,000. You can expect to pay $195,000 in 18 years.
For a public college or university with out-of-state tuition, the current annual cost is $19,000. The cost for 4 years at one of these schools will be $285,000 if your student is starting college in 18 years.
For private universities, which are currently averaging approximately $28,000 a year, the estimated cost will be $420,000.
529 College Savings Plans and Savings Amounts
Contributing to a 529 college savings plan can help meet the cost of a college education. The amount you need to save doesn’t depend only on the total annual cost of your child’s college education in 18 years. You should consider the rate of return on funds invested in a 529 college savings plan. You can also consider other factors, such as scholarships, grants and subsidized student loans. You also do not need to pay the highest price for college or university tuition. According to Federal statistics, in 2010, more than 40% of students attending a four-year college paid less than $7,000 in tuition and fees, and only 6% of students attended private colleges or universities that charge $24,000 or more for tuition.
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Click here to check out GradSave’s College Savings calculator to learn how much you need to save.
Posted by MichelleTue, November 29th, 2011 @12:32PM
