My Kid’s College Costs will be $467,000! Are You Kidding Me?
In preparation for my first child, I started to think about saving for college. I found this neat calculator from SallieMae and tried it just to get an idea of how much will college costs 17 years from now (2024). Based on the site, the current average annual tuitions are:
- $2,191 for two-year public colleges
- $5,491 for four-year public colleges and universities (in state)
- $21,235 for four-year private colleges and universities
I plugged in the following information:
- Current Annual Cost of Attendance = $22,000
- Years Until Child Starts College = 17
- Expected Annual Cost Increase (%) = 7%
- Expected number of Years of College = 4
…and the answer is…I need to save $308,549 for ONE child. Are you freaking kidding me? I hope my kid is real smart or athletic, so he will be eligible for scholarship.
To check my number, I found another calculator from FinAid. This site also offers some more useful information that I summarized here:
- College costs increase is about twice the inflation rate; currently increases have average 5% to 8%.
- Total cost includes tuition, fees, room and board, books, travel, and incidental expenses.
- According to the College Board’s Trend in College Pricing, the 2006-2007 average annual total costs were:
- $12,294 for two-year public colleges
- $16,357 for four-year public colleges and universities (in state)
- $26,304 for four-year public colleges and universities (out of state)
- $33,301 for four-year private colleges and universities
Base on this, the total projected costs is $467,045.18. Ouch!
I even tried a more conservative numbers at $16,000 for four-year public college at 6% rate; the total projected cost is still in the mind numbing $190,000 range.
I was going to write a whole post about my strategy and plan to save for my kid’s college, but right now, I need a beer. I will have to do some more research before I can come up with some options. Once I have some more information, I will post it here.
If you have any idea, please leave a comment. I can really use some help.
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Why is it a given that they’ll go to a private college? If that isn’t a must for you, there’s a huge difference by going to an in-state school. The total is $77K.
KMC – welcome to Moolanomy and thank you for your comment.
In this post, I am exploring the worst case scenario. Once I formulate my college saving plan, I think having my kid attend in-state public school will be a big part of it. In NYS (if I am still here in 17 years), we have excellent state universities. In fact, I almost attended SUNY Binghamton myself.
Great…can’t wait to have those kids! Thanks for the link to the calculator..
David – welcome to Moolanomy. Hey, you don’t have to wait. You can start saving now.
Hi, well I tried to leave a comment a few days ago but for some reason it didn’t appear. Anyway my idea on paying for the college expenses in the future is why not now put the $5,000 or $20,000 of todays college costs into an asset that will appreciate in value as will the college costs. You can then sell the asset in the future to pay for college then. The asset could be a section of land on the outskirts of a city – which will be part of that city in 17 or whatever years time. Or a stock or mutual fund that reinvests the dividends back into more shares
Geoff – welcome to Moolanomy and thank you for trying again.
I am definitely starting this year, but I am still looking for the right investment plan. I am gravitated toward 529 plan; however, I need to read more about it. I will keep you posted.
Oh yeah, I wish I am one of those college town landlord. I think they make a bundle of money on mediocre properties.
$467,000. Wow. So if someone has 3 kids should they multiply that number by 3 to get the estimated college costs? Or is there a special, like Buy 2, Get 1 Free? sigh…
Erin – welcome to Moolanomy.
Well, $467k is worst case scenario. If I have 3 kids, I would definitely consider good a city or state university in my area to cut down on tuition and boarding expenses. If they insist on Ivy League, I will most likely tell them that they can transfer after their Sophmore year if they qualify.
This is a scary number. My kid is due to enter college in 2021. Oddly, I felt much more panicked about college savings when he was a baby than I do now that he’s almost 4. I think what changed is that it became clear that the grandparents would make a small contribution each year for his birthday, and also I decided that I don’t have to be prepared to pay for his entire education. My plan is to tell him I can pay for all of a public school education. If he wants to go to a private school for some reason, I will encourage him, but he’ll have to take out loans for part of it. I want to help him keep his loans to a minimum, but I think it’s actually a good thing to put some of the responsibility on him so that he values his education more, etc.
There’s a good thread about this over at savingadvice.com:
Have you started a college fund
@TBH – thank you for your contribution. I really like your insight about saving enough for good public education and give your child the choice and responsibility if he wants to go to a more expensive private school.
Lastly, welcome to Moolanomy and thank you for the link.
Hi Pinyo, just wondered how you came up with the 7% expected annual cost figure? Is this from some research or just an estimate of a worst case projection? I agree though it’s a scary thought about the costs!
@Make Friend – When I wrote this post, I read a few articles, and also saw 7% as the default on many calculators.
Don’t rule out private colleges entirely – I got a great financial aid package from a private school and it cancelled out the price differential.
@Elisabeth — Good point. I didn’t factor it in because I was going for theatrical.
We are doing what TBH (post Sept. 2007), did; offering to give our now 19-year-old 2 years at community and 2 years at the local public 4 year, so she can live at home without room and board costs, etc. If she wants something with a fancier ribbon, then that’s on her. If she just wants to move out on her own, she can get a part time job and do so, and we’ll continue to cover her education costs.
Have you ever thought about looking outside the box (of the United States) for post secondary opportunities? See http://www.nyu.edu/classes/jep.....-05-11.pdf; interesting article.
Someone in the high school counselor’s office indicated that college costs had gone up 10 times in the last 20 or 30 years in the US. Wow.
@BLC – I wrote and article with ideas on how to spend less on college, but I have never thought about education outside of the U.S. — that’s a great idea to pursue.
Hello… Here is an option that is available in my school district (a District in Washington State) that may or may no be in your area. We have a program called Running Start where a student, once he/she enters their junior year in high school, attends half day at the high school and half day at our local community college. This program is great for kids who aren’t involved in sports etc… Anyway, the result is that there are several of our students in our district that receive their AA at the same time they graduate from high school. And, the cost is on the district!! The obvious benefit is that the student enters into a 4 year program with junior status! Check it out in your area!