Baby makes three — and a college savings plan (BBC) {shocking numbers}
By Kate Ashford
Tobi Kosante put herself through college and graduate school after her father’s medical bills drained the family’s college savings. She survived on grants, teaching assistant work, and loans that she paid back for years after graduating. It’s a situation that is not uncommon in the United States, where post-secondary education isn’t subsidized by the government. More than two-thirds of U.S. students receive some amount of federal, state, or university-granted financial aid.
She doesn’t want her 8-year-old daughter, Jemma, to have the same experience. “I don’t want my daughter to have to work in school,” said Kosante, who lives in Hempstead, Texas. “I want her to be able to concentrate on her studies. I can’t think of any gift I could give her that would make an impact on her life as much as ‘Just relax, I’ve got everything covered.’”
Kosante and her husband, both geologists, started saving for Jemma’s education when she was a toddler. Today, they have more than $32,000 tucked away. They’re currently setting aside $500 from every paycheck--10 times the $50 a month they were saving originally. Despite the strong start, Kosante says she’s a little panicked as the price of college keeps rising. The average published tuition and fees for in-state students at public four-year schools rose 4.8% in 2012, and has gone up by 27% beyond the rate of inflation since 2007, according to the College Board.
“We can easily develop a fatalistic view if we start with, ‘Gosh, look how expensive college can be,’” said Tim Maurer, a financial advisor in Hunt Valley, Maryland. But it doesn’t have to be that way. Here is what experts say you will need to save for college costs:
What it will take: If you expect to pay for the whole shebang, plan to set aside $350 a month from birth to cover an in-state public four-year school; $700 a month to cover an out-of-state four-year school; and $1,050 a month to cover a private four-year school, Maurer says. (He assumes a 7% rate of return.) The all-in expense total at most four-year schools today is roughly $23,000 to $45,000 per year, and experts estimate a 5%increase per year, on average, going forward. That means for today’s 8-year-old, the low-end sticker price of a four-year college will be about $170,000.
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more: http://www.bbc.com/capital/story/20130522-college-savings-begin-at-birth
