Sweetpea's College Costs have been worrying me for a while now even though she is not even born yet. Consider the facts for 2007:
Four Year Public School Tuition $5,836 per year
Four Year Private School Tuition $22,218 per year
Source: Collegeboard
A good rule of thumb is that tuition rates will increase at about twice the general inflation rate. With the inflation rate hovering around 3% for some time now, I can expect college tuition costs to increase by 6% yearly. Recalling the future value of money formulas from my college days:
(1+i)^t
where i is the interest rate and t is the number of years,
we substitute the i with .06 interest and t for 18 years. We have
(1+.06)^18 = 2.85.
So in 18 years, the costs for college in 2026 is roughly:
Four Year Public School Tuition $5,836*2.85 = $16,632 per year
Four Year Private School Tuition $22,218*2.85 = $63,321 per year
Now call me worried or what? These are high costs, and that does not include room and board! And I would not want my kid in $250k debt by the time she gets out of college. So what is a father to think of when it comes to future college costs?
1) Coverdell Education Savings Account
2) 529 Plans
Stay tuned for the differences between the two and the course of action that I will be taking. And remember, you can post without logging in now!
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6 comments:
Wow, those kiddos sure do cost a lot! :) By the way, when I tried to post a comment a couple days ago it said that my comment had to be approved by the contributors.
Gerber baby future!! =)
https://www.gerberlife.com/gl/view/l3/portal/gu_one_page/clickthrough/send/2007/send_009295_nonbrand_a.jsp?sourceid=GL009295&sendroicid=26ED9618-0A9D-4A9B-9339-904FFFDA4E4F&sendroiad=698245790&sendroikwd=gerber
Oh and besides...my niece is going to be sooo smart she'll have an influx of scholarships!! =)
oops...i was reading the insurance plan more in depth; I think they only fork out the education fund if some kind of emergency situation happens- forget I mentioned it!! Just save what you can and trust that God will provide the rest one way or another!
wow....u learned something in college :O
So what is a father to think of when it comes to future college costs?
You forgot about option 3: steal.
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