Define college costs
Everyone is aware of the escalating costs of a college education. According to the Bureau of Labor Statistics, tuition has increased by 8% per year, on average, from 1979 to 2001. This means that children born today will face college costs that are 3 to 4 times the current prices.
Accordingly, it is very important that parents start saving for their children's education as soon as possible, even as early as the day the child is born. Time is one of your most valuable assets. The sooner you start saving for college, the more time your money will have to grow.
If you start saving early enough, even a modest weekly or monthly investment can grow to a significant college fund by the time the child matriculates. For example, saving $50 a month from birth would yield about $20,000 by the time the child turns 17, assuming a 7% return on investment. Saving $200 a month would yield almost $80,000.
The first step in planning for a college education is to estimate realistically how much college costs will be. College costs can be separated into two categories: direct and indirect.
Direct college costs include tuition, fees, room and board. The latest information concerning direct costs is available from each particular institution. Additionally, publications are available that provide information about college expenses.
Indirect college costs include other necessary educational expenses, such as books and supplies, transportation, medical coverage, clothing, recreation, and other personal expenses. These indirect costs vary considerably among students, and are, therefore, more difficult to estimate than direct college costs. Contact the financial aid office at the institution you are interested in for information concerning typical indirect expenses of students in a particular area.
If you want to estimate, the current average annual costs of a college education, which includes room, board, fees, books and supplies, is:
- Ivy League college ($36,604)
- Private college ($27,677)
- Public college ($12,841)
If you want details on the direct costs of an education at specific colleges or universities, try using the calculator below (the results are provided by cnn.money.com). Just enter the state and view all of the included colleges, or you can type in a specific college to learn its annual costs as of 2007.
Step 2 - Estimate Financial Assistance