Cost of College

College costs are rising every year and paying for those increases can be difficult. The average price of a four-year education at a public university for 2005-2006 was approximately $68,000 and about $139,000 at a private university*. Don’t expect college costs to remain at these levels. Instead, be prepared for yearly increases.

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On average, public institutions annually increase their tuition and fees by about 7% while private schools increase their rates by nearly 6%.

Room and board costs also increase annually by about 6% at public schools and 5% at private institutions.*
*Source: Trends in College Pricing. The College Board 2005-2006.

Benefits of College

While the cost can be daunting, it should not discourage parents from sending a child to college because there are many benefits to a college education.

The benefits of a college degree will quickly outweigh the financial investment needed to acquire the degree. According to the most recent United States Census Bureau survey, people holding bachelor's degrees are expected to earn $2.1 million over the course of their working lifetime – almost $1 million more than the $1.2 million in lifetime earnings for people who hold high school diplomas only.

Average income for people 25 years and older with a bachelor’s degree in 2003 was $49,000 compared to $30,800 for those with only a high school diploma.

An advanced degree increases a person’s earning potential even more. The average income for people with an advanced degree was even higher at $59,500.* A college education opens many doors of opportunity and leads to greater financial success.
Source: The College Board, Education Pays 2004, The Benefits of Higher education for Individuals and Society

Paying for College

While it is difficult to know exactly what a four-year education will cost when your child is ready to attend college, families that plan ahead will be better prepared to handle the expense.

The earlier you start to save and invest money for a child’s education, the longer those funds have to accumulate and grow. Every dollar you earn or save in advance is a dollar less that the child will have to borrow.

Luckily, saving and investing for college is easier than ever. A variety of options exist to help families save for college including prepaid tuition plans, savings plans, Coverdell education accounts, and custodial accounts.

All of these plans have significant advantages over the traditional method of saving for college; however, each plan has some disadvantages and some plans are more likely to accomplish your savings goals than others. You can learn more about pros and cons and get a comparison of all the plans here.