Sending your child off to college is an exciting milestone, but preparing for that moment can come with its fair share of challenges.
Besides the emotional transition, there’s the price of higher education to consider, which can be difficult to predict years down the line. However, strategic planning and consistent savings may help safeguard against future financial strain. Here are some valuable strategies for estimating the cost of college for your kids so you can kick-start your savings plan now.
Start right away
As with any expense, the earlier you begin planning for college costs, the better. Even if your child is only just starting kindergarten, there’s no harm in opening a savings account for them. A contribution of as little as $50 a month will still give you a solid head start, especially as you’ll have thirteen more years to progressively build up those funds. Further, if you use a high-yield savings account and make a habit of not touching that money, you’ll earn a great deal in compound interest that you can then use for future educational expenses.
Consider current prices
To help you gauge the total sum of your child’s future education-related expenses, look first at the current cost of colleges. Since you don’t know where your child will attend, you may want to check the price of tuition for various public, in-state institutions as well as for private ones since you may not know where your child will attend. Each institute is required to have a net price calculator that prospective students can use to average out the cost of tuition and fees, which will allow you to get a rough number to work with.
However, college expenses go beyond just tuition fees. They also include room and board, books, supplies, transportation, and personal expenses such as food, clothing, and entertainment. These may all impact how much you’ll want to save in your child’s college fund. As your child grows up, check in with them repeatedly about their thoughts and ideas for the future. This will give you a better idea of the type of college they may be interested in attending so you can adjust your savings plan accordingly.
Anticipate cost changes
When estimating future expenses, try to account for the average inflation rate for education-related expenses. Historically, the cost of tuition has increased annually by more than 10 percent. You can use this as a general guide for how to adjust the target savings number you came to from looking at current college costs.
On the bright side, a lot of students qualify for some form of financial aid, including federal grants, scholarships, and work-study programs. While you can’t always plan for these since you won’t know what your child will qualify for until they start applying to colleges, it’s still important to understand them so you can help your child take advantage of any opportunities afforded to them. Encourage them throughout their life to challenge themselves academically, get involved in extracurriculars, and consider other pursuits; many organizations offer scholarships based on these activities and achievements. If they end up getting their tuition fully or partially covered, there may be money left over they could for other expenses.
There’s no perfect way to estimate the price of college for your children, but with careful planning, you may be able to eliminate some stress when it does come time for them to pursue higher education.