According to The College Board®, the average 2014-2015 tuition increase was 3.7 percent at private colleges, and 2.9 percent at public universities. The ten-year historical rate of increase is approximately 5 percent. These figures are substantially higher than the general inflation rate. They are also higher than the average increase in personal incomes.
Saving for College
No matter how much you save, even a little can make a big difference.
When you’re saving for college, it’s so important to put time on your side. The earlier you start, the better – and the more you contribute early, the more compounding you can take advantage of to build college savings.
Set your college savings goals realistically. You may not be able to save enough for all four years of tuition, room and board, and other expenses - but you could save enough to give your child the right start.
Contributing Early and Often
A family that begins setting aside $50 a month when their child is born can accrue over $21,000, in an account that earns 7% interest per year, by the time the child turns 18.
Education planning can never start “too early.” The key is to contribute early and often. If the cost of college continues to inflate at 5% (as it has over the last decade), that would lead to the cost of college doubling in just over 14 years!
Are you saving for college with that reality in mind?