According to the data from collegeboard.org, four year public universities raised their tuition & fees by an average of 5.26% per year during the last 10 years (2007 – 2017). This number increases to 6% when you capture the last 20 years and 7% since the 1970s.
What Does This Mean In Dollars?
Vanguard’s College Cost Projector will provide some guidance on the actual dollar amounts of future tuition rates and fees. The graph below depicts a 14 year projection of when my 4 year old nieces will be going to college (2032).
College Cost Projector For Temple University Tuition & Fees:
This estimation doesn’t even include transportation, food, books, or room and board. Now, you can all join my older brother when his jaw drops reading this.
If the cost of pursuing certain careers begins to outpace stagnated wages, it becomes difficult to justify the investment.
Starting my career with over $100K in student debt was harsh. Especially when my annual take-home pay was about a third of what I eventually paid back. While I was paying $500 per month to help my mom with house bills, I was using nearly my entire paycheck to pay down my loans and did this for 1-2 years. As you can tell, I’m a rip the band-aid off type of guy.
The rising 1.4 trillion dollars in student loan debt is leaving graduates financially crippled for the first 1-2 decades of their career. Citizens bank research notes that 60% of borrowers pay off their student loans in their 40’s. All-the-while sacrificing the life they want to live to pay off these loans. I certainly would not want my children to deal with the same financial burden from student loan debt if it can be helped. Who would want to start their careers with student debt the size of a small house?
Given that the annual cost of college rises faster than inflation, it is imperative for you to start a college fund for your children ASAP. Small savings now can mean a big payout later.
My wife and I have already started to save for our future children’s college. We’re not even planning to have kids for another year or two.
If your college fund is well invested and well funded, its value should at least keep up with the rising cost of college. Now, where to invest?
Learn about college savings accounts like the 529 Plans, ESAs, and other means to fund your (children’s) college.