Skip navigation
Locations

The Citizens' Blog

Saving For College

Tuesday, January 11, 2011 at 4:40 pm by Administrator

As 2011 starts there are new beginnings and goals for us to achieve. Attending college is among these goals for many people.  Saving for college and the expenses that are associated with attending a college is another matter.  It is important to realize what a college education costs and the benefit of having some or all of college paid for can do for a college graduate.

 First, let’s look at today’s average cost for one year of college. These numbers include room and board, credits for a degree, and miscellaneous expenses, i.e. books, paper, etc., for one year of college, with no repeat courses.

  • Average cost for a Private College: $ 33,301
  • Average cost for a Public College: $ 16,357
  • Average cost for an Out of State Public College: $ 26,304

 Next, let’s assume college costs will inflate at a modest 2% annually, culminating in a 4-year cost of $72,625.00.  This also assumes that you or your child doesn’t change majors, doesn’t retake any classes and is able to graduate in four years. (Here is the link to this calculator used to figure the costs of college over four years http://parentingteens.about.com/library/tips/blcollege_calculator.htm)

 With these numbers it seems a daunting task to save entirely for a college education.  However, the good news is that this doesn’t have to be the case if you start saving early in your child’s life.  Looking at calculators available on the internet for this savings (http://www.savingforcollege.com/college-savings-calculator/), a person would need to contribute $286.00 a month to pay for the entire college education by the time a student enters college at the age of 18.  By comparison, this is pretty similar to a car payment that is going to drive your child’s future. 

 Finally, now that you know how much to save on a monthly basis, there are many different investment vehicles to help you achieve the goal of paying for the college education.  529 plans are a popular choice, they offer tax incentives that saving by you through savings accounts or government bonds don’t.  It is important to talk to a certified investment representative or a 529 plan advisor if you are interested in opening a 529 savings plan.  Here is a link to common 529 questions and answers: http://www.collegesavings.org/whatIs529.aspx.  It is also possible to save for college with CDs, and other investment vehicles, although the tax advantages might not be the same: http://www.savingforcollege.com/intro_to_529s/what-is-a-529-plan.php

 The gift of a college education can never be underestimated. To have your children or grandchildren graduate from college and have no debt to pay back gives them a step up on the competition in the real world.

 If, on the other hand, you are betting on a college scholarship in athletics, here is a good article to give you some perspective on the perils of that pursuit - http://www.nytimes.com/2008/03/10/sports/10scholarships.html?_r=2&pagewanted=1

 

*The Citizens First Bank Blog is intended to provide our customers and visitors to this website with unique insights into the financial services industry. While we hope you find this information interesting, it is not intended as specific advice. If you consider the topics we share here relevant, please contact a representative of Citizens First Bank at any of our branches to discuss further.

In some of our blog posts, we choose to share information from other websites. If you click on those links, you will be taken away from citizensfirstbank.net, and Citizens First Bank is not responsible for information shared on those websites.

Email Post

Comments


No Comments