Saving for college
- Thread starter JWIL4CY
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Your % increase isn't exponential. The increases in tuition have been exponential, meaning they go up 8% per year continually, building on the already increased 8%.
So to figure the cost of 1 year of college you would use an exponential function. y=a(1+b)^x where y is the cost of 1 year of college when your kids go to college, a is the cost right now for 1 year of college, b is the percentage increase per year, and x is the number of years.
So, y=$15,000(1+.08)^18 = $59,940 per year x 4 years = $239,761 for a total tuition cost.
It is going to be crazy if the 8% increase actually keeps up, hopefully someone finds a solution to the problem.
Something definitley has to change. That doesn't even take into account an out of state or private school, or going more than 4 years. I can't imagine too many kids would choose a college degree + 200k of debt at that point.
It will eventually get to the point where no one will be able to afford to go. Like you talked about, not many people have $1 mil to drop on kids' education.
Yeah, at some point market forces have to bring this back under control. It seems that tuition prices are rising far faster than salaries. The cost of college has always been a good investment because you make it back ten times over in improved earnings. As the tuition costs keep gaining ground on earnings, college becomes a good choice for fewer and fewer students, and I don't think schools can deal with dramatic decreases in enrollment.
College expenses cannot continue to climb at the rate they currently are. At some point it will become too expensive to go.
One thing to keep in mind about private schools is that many of them have hefty aid packages so many students don't end up paying anywhere near what the listed tuition is.
The single most important thing is to save now and not wait. As the time gets closer you'll have a better idea of what you'll realistically be able to afford, but that picture is going to depend largely upon how much you're putting away in the next 5-10 years.
Have a daughter going to ISU next year. Have some money saved for her. My wife and I are both working and will continue to so paying as we go will work for us. The thought of trying to save $250k per child is crazy. Who can do that and have a life too?
Also, as the cost rises, it will be more and more attractive for high school kids to look at getting a technology degree, learn a trade, do an apprenticeship, etc. They are already saying the workforce is short on the tech and skilled positions. Lots of welders out there making very good money with good benefits.
Agreed. Remember, you can get a loan for school, but you can't get a loan for retirement.
I went to school '98-'02 & paid the full cost myself since I had no scholarships & parents couldn't afford to help me.
Based on what has happened since then with the rising costs, I feel pretty confident that I would not have gone to school & graduated in 4 1/2 years. Even though I had saved money no doubt I would have needed to take a year off & work or do something to generate income to make it feasible.
Based on what has happened since then with the rising costs, I feel pretty confident that I would not have gone to school & graduated in 4 1/2 years. Even though I had saved money no doubt I would have needed to take a year off & work or do something to generate income to make it feasible.
Just an idea. If you receive a bonus, don't spend it. Save all in a dedicated college savings plan.
Parents usually have to co-sign for a lot of these student loans so that doesn't get you off the hook. The reality is that you have to save for retirement, college, and all those nasty surprises that keep popping up in life like new roofs, braces, and new transmissions for your car.
Use the calculators to get you started with an amount to save per month for college and then make sure to have it auto transferred from your checking every month into your 529 account. That's what we did. We started almost the day our kids were born (pre 529!) and I can't emphasize enough how much easier it has made our life.
My son started at ISU last year and I just get online, have the money transferred to pay the ubill and go to bed without worrying about it. My oldest should be fine, there is enough money in the accounts to cover 4 years. My youngest account's aren't so hot (timing through the years can make a huge difference) but it should be reasonable for us to make up any difference. If he decides to go on to med school that's a different story.
My husband and I were able to pay for almost our entire college educations ourselves with almost no loans. Being able to start out as adults without debt made a huge difference in our lives, imho. I think you are correct to want that option for your children too.
we dont have kids yet but this is one of a few reasons we are debating if we ever should. Altough we have said the kids would always pay freshman year and we'd pick up the other three (we are going to win the lottery) so they take it more seriously than her and i did. With more kids graduating and jobs paying less what is the break even point? Add to that the smaller gov/non profit budgets for social sciences and it hardly seems worth it. Best of luck to you and it sounds like your children will be blessed.
Hi. I taught the doctoral level higher education finance course at ISU for more than 10 years before retiring and also worked with financial aid for years before becoming a faculty member. One way to estimate costs is to start with a number that will cover as much as you wish in terms of college costs. You may wish to pay for the entire cost, just tuition, or some combination of the various items that comprise the cost of attendance. Say the amount is $15,000.
Then you need to estimate what the increase in the cost you wish to cover on an annual basis. Say that is 6% but remember it could be more or it could be less. In actuality, state governments have been contributing less to state universities since around 1980. Will universities receive more or less in the future? This depends on elections.
The next issue is how many years until the youngster will go to college. Suppose the child is six years old, so that means in 12 years the child will go to college. Take the cost of attendance, divide the percentage increase into 72, and that will tell you how often prices will double. If the cost is $15,000, and the cost will increase on average by 6%, then the $15,000 will become $30,000 in 12 years, and that will be the cost for the first year. Four years will be $120,000 not including the cost of inflation while the student is enrolled. Just remember, the key is 1) what the cost is now; 2) what the percentage increase is that you estimate; and 3) how long until the child goes to college.
One other thought--don't plan on scholarships from the institution. The key variable here is that the more your student is like all the other students (high school gpa, class rnak, act or SAT score) the less it is likely the child will receive gift aid, unless----your child is an extraordinary athlete, remarkable musician, or has some other characteristic that places the student apart from his/her peers.
My advice--save all you can through your 529 plan. We have a five month old grandson and we have already given $$$ to his parents to get his 529 plan started and they contribute money as well. Children only get more expensive as time goes by, so take advantage of compounding while you can.
Good luck,
JHS
