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Saving for College Made Easy (or at least easier)

Saving for College Made Easy (or at least easier)

Saving for your Child’s college education? Here are some things to consider.

The costs of sending a child or a grandchild to college are high and getting higher.  Actual costs vary by school, but a general place to begin is to consider that today’s tuition, room, board, books, transportation, and incidentals will probably run:

  • Private 4-year University - $40,000
  • Public 4-year University for in-state students - $20,000
  • Public 4-year University for out-of-state students - $32,000
The rate of college costs increases has been higher than inflation, 5% to 8% for the past several years.  If we assume just a 5% annual cost increase, the cost of a child’s first year of college will be:
Current age Years to college First year costs at a private university First year costs at a public university for an in-state student First year costs at a public university for an out-of-state student
16 2 $44,100 $22,050 $35,280
12 6 $53,604 $26,802 $42,883
8 10 $65,156 $32,578 $52,125
4 14 $79,197 $39,600 $63,358
0, just born 18 $96,265 $48,132 $77,012

Save early and often

Even considering that the child may qualify for a scholarship or that you may have already started saving, the costs shown above can be frightening.  They only represent the first year.  When you consider that most students will attend college for four years and maybe graduate school beyond that, the need to save more is obvious.
Here is a chart showing how much you should save monthly to completely fund four years’ of college for children of different ages.  The chart assumes you want to have accumulated all the funds needed before the student starts college.
Current age Years to college Monthly Savings Needed to Fund Four Years at
Private University Public University for in-state student Public University for out-of-state student
16 2 $7,870 $3,935 $6,296
12 6 $3,173 $1,586 $2,538
8 10 $2,302 $1,151 $1,842
4 14 $1,989 $994 $1,591
0, just born 18 $1,871 $935 $1,497
(Assumes an earnings rate of 3%.)

Start Your Automatic Savings Today

There is no easier way to save than with an automatic savings plan. If you are already using direct deposit for your paycheck, have your financial institution transfer the amount each month. Here is an Automatic Transfer Authorization form to help you enroll. You can also have your employer deduct the amount each month and deposit into the account of your choice. Here is a Payroll Deduction Direct Deposit form.

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