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College Savings 101: How to Pay for Your Kid's Education
Have questions about how to save for your child's college education, how much to save, and where to look for good financial vehicles? Gain insight with this helpful guide.
Making sure there's enough money to support your children is a concern that keeps many parents awake at night. And it is no wonder! In today's ever-changing world, how will you afford to fund your child's college education?
Costs on the Rise
According to the College Board, the 2007-08 average costs were $6,185 per year (in-state) for students attending public colleges and universities, and $23,712 for students at private colleges and universities. Out-of-state students attending public colleges and universities paid an average total annual cost of $10,455.
How Much Is Enough?
Several national polls have shown that parents who are currently saving for college aren't saving enough. Accordingt to FinAid, a comprehensive guide to college financial aid, a 2007 BankRate survey found that 86% of parents with children under age 18 expect their children to attend college or univeristy, but only 47% felt that they could afford to send their children.
Lyndsey Martin, 29, who is studying for a master's degree in teaching, says that she is saving for her son's education now, even though he's only a toddler.
"I think it's very important to save for Cameron's education. My parents did not save for my education and I'll be paying for my degrees even when Cam enters college," she says.
Clearly, the sooner you start saving the better. Even if you can only set aside a small amount in each pay period, that money will have more time to work for you the further away your child is from beginning college.
Financial Aid
Information provided by FinAid suggests that parents saving $50 a month from a child's birth would yield about $20,000 by the time the child turns 17, assuming a seven percent return on investment. Saving $200 a month would yield almost $80,000.
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