Estimating College Costs

For most people, a child’s college education is the second most expensive purchase (after that of a home) they will ever make. Estimating a college education’s cost, and the required savings to pay for it, is difficult, but the following tables can help you make an educated guess.

According to The College Board’s Trends in College Pricing 2008, the average annual cost for in-state tuition, fees, room, and board at a four-year public institution is $14,333 for the academic year 2008–2009. For a private institution, the cost of tuition, fees, room and board is $34,132. Both public and private colleges and universities experienced an increase of over 5.5% from the prior year, 2007–2008.*

If the cost of a college education continues to increase 6% annually, and your child enters a private college in the 2020–2021 academic year, the estimated tuition will be $69,996. Based on the projections below, a four-year education would cost approximately $280,000. For young families, skyrocketing cost projections can lead to sticker shock, but there are strategies that can help you keep pace with tuition hikes. The College Board reports that almost 75% of undergraduate students receive some type of financial aid. * In addition, the federal government offers tax breaks for education savings, as well as other credits and deductions for taxpayers currently facing college costs.

Use the table below to estimate the approximate annual cost of tuition, as well as room and board, for a four-year undergraduate education based on the year a child will enter college, the inflation forecast, and the choice of a public or private institution.

Public Colleges & Universities Private Colleges & Universities
School Year 3% Inflation 6% Inflation 10% Inflation 3% Inflation 6% Inflation 10% Inflation
09–10 $14,769 $15,217 $15,834 $35,170 $36,237 $37,706
10–11 15,218 16,156 17,492 36,240 38,472 41,654
11–12 15,681 17,152 19,323 37,342 40,845 46,016
12–13 16,158 18,210 21,347 38,478 43,364 50,835
13–14 16,649 19,333 23,582 39,648 46,039 56,158
14–15 17,156 20,525 26,052 40,854 48,879 62,038
15–16 17,678 21,791 28,780 42,097 51,893 68,534
16–17 18,215 23,136 31,793 43,377 55,094 75,711
17–18 18,769 24,562 35,122 44,697 58,492 83,639
18–19 19,340 26,077 38,800 46,056 62,100 92,397
19–20 19,929 27,686 42,863 47,457 65,930 102,072
20–21 20,535 29,393 47,351 48,900 69,996 112,760
21–22 21,159 31,206 52,309 50,388 74,313 124,568
22–23 21,803 33,131 57,787 51,920 78,897 137,611
23–24 22,466 35,175 63,838 53,500 83,763 152,021
24–25 23,149 37,344 70,523 55,127 88,929 167,940
25–26 23,853 39,647 77,907 56,804 94,414 185,525
26–27 24,579 42,093 86,065 58,531 100,238 204,952

Figures are estimated projections based on the average cost of tuition at public and private universities for the 20082009academic year.

How Much Do You Need to Save?

By starting a disciplined savings plan now, you are better positioned to meet your child’s future education needs. The following table shows the return of a variety of monthly savings contributions, earning 6% interest, for intervals of 5, 10, and 18 years—the average college age. This example assumes a 25% federal tax rate and 3% inflation.

Save per Month 5 Years 10 Years 18 Years
$50 $3,109 $6,454 $12,339
$100 $6,219 $12,909 $24,678
$250 $15,549 $32,273 $61,696
$500 $31,099 $64,546 $123,392
$1,000 $62,199 $129,093 $246,785

For illustrative purposes only. Not indicative of any particular savings vehicle or insurance product.

Many parents postpone planning education funding because the task seems overwhelming, or they think saving the required amount of money will force them to severely compromise their current lifestyle. While these are legitimate concerns, they need not stop you from establishing and maintaining an effective college funding plan. Whether considering a public or private college for your child, the key to effective planning is to begin saving as early, and as much, as possible.

*Source: The College Board, Trends in College Pricing, 2008.

 

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