REDMOND, Wash., Oct. 2, 2000 — Planning to send a child to college in the near future? For most parents, the answer is yes: the National Center for Education Statistics predicts that the number of college students will climb from 14.3 million in 1996 to 16.2 million in 2008. Sixty percent of that group will be today’s 10 to 16 year-olds.
While many parents begin thinking about college when their children are born, those who actually plan accordingly are in the minority. A recent survey conducted by Yankelovich Partners revealed that more than half of American parents have no estimate for the future cost of their children’s education — nor do they have a savings plan in place to fund this considerable expense. Furthermore, almost half of the parents surveyed wish they had started saving earlier, and nearly a third of these wish they had more information about managing their money or investments at an early stage. With the right resources, however, it is easy and realistic to design a program that will help ensure a child’s educational future.
“Planning and saving for a child’s education is simple with the right tools,”
said Christy Heady, author of The Complete Idiot’s Guide to Managing Your Money .
“Whether the child is a toddler or already in high school, getting started is the first and most important step.”
Understanding the True Cost of College
Once the decision is made to start saving, parents need to determine the true cost of a college education — adjusted for future growth. Historically, college costs have risen at rates higher than inflation. According to The College Board, the annual cost of attending a four-year public college has increased from $3,300 in 1983–1984 to $10,500 in 1998–1999, and the cost of attending a four-year private college has risen from $7,200 in 1983–1984 to $22,500 in 1998–1999. American Express estimates that a family planning to send their 10 year-old child to a public university in the year 2008 will need to save an average of $64,191 over the next eight years, or $480 per month. On average, the same family would need to save $138,203 in order to send their 10 year-old child to a private university in 2008; a savings of approximately $1,032 per month.
To determine the financial commitment for a family’s particular college goals and budget, Heady suggests using a personal finance software program such as Microsoft’s Money 2001 Deluxe. This software program will estimate tuition and housing expenses for hundreds of colleges and universities across the nation. A parent simply selects the school of their choice — whether it’s a private university or the local state college — and Money 2001 calculates the total amount they will need to save by the time their child turns 18. Tools like Money’s Budget and Cash Flow planners can then help determine the amount of money they’ll need to set aside each month to reach that goal. The program can even search for college applications and scholarships online.
“The beauty of a program like Money 2001 is that, no matter your current financial situation, all the tools for establishing a realistic college savings plan are at your fingertips,”
said Heady.
“Once you’ve determined your education goals — or any other long-term financial goal for that matter — you can take immediate action to begin achieving them.”
