The Secret to making College More Affordable
If you have children, you want to be able to send them to college. It’s every parent’s dream. Yet the average annual cost of a public, four‐year college today is about $20,000 for in‐state students. Private schools can top $45,000. And the tab keeps rising.
Saving enough to pay the bills for one child is daunting. Paying for two or more … is downright frightening. But the college education you want to provide for your children can be within reach. How?
Start saving early. While they’re still in diapers even. That’s because you can build savings in tax‐favored plans, such as 529 plans or Coverdell accounts. And tax‐advantaged savings can be a powerful way to fatten your college fund over time.
Here’s how it works: Let’s say you sock away just $200 a month as your child grows. After 17 years, assuming your investments earn an average of 8% annually, you would have invested about $40,000, but you will have almost $87,000 in your child’s education kitty.
Throw in the occasional windfall, gifts from grandparents, and maybe even some of your student’s summer earnings and voila! Paying at least some of those college bills just became a realistic goal. Remember: When it comes to saving for college, you have nothing to lose by getting started early and everything to gain.