Now that I have a 7 month year old child, I am thinking about the cost of college in 18 years because I know the cost will only rise. According to cnbc, in 18 years the average cost for a private university could be as much as $130,428 per year. In 18 years the average cost for a state university could be as much as $41,228 per year. 4 years at a private university would cost me $521,712 and 4 years at a state university would cost me $164,912 per child. If you have several children, these costs are going to be multiplied by the number of children you have.
My big priority right now is to pay off my mortgage as quickly as I can. Once I achieve this, I am going to make sure I put away a significant amount of money for my child’s (possibly children’s) education fund. If I start saving when my child is 5 years old, this only gives me 13 years to save up enough money for my son’s college fund. If he goes to a state university, I will need to save roughly $1,000 per month for 13 years. If he goes to a private university, I will need to save roughly $3,000 per month for 13 years.
You can look into a 529 plan, which is a tax-advantaged savings plan designed to encourage saving for future education costs. I am still determining if this is the best route for what I am trying to accomplish. My reservation is if my child (or children) decide they do not want to go to college. There may be some penalties associated with this that I am not willing to endure. I can only hope they are able to get some sort of scholarship to help them with their tuition. I do want to provide them with as much assistance as I can because it is a very big benefit to get out of school debt free. I want to make sure they are able to focus completely on their schooling and not need to worry about financial issues.
Fortunately, my parents did pay most of my schooling and it was a very big help. It allowed me to get a jump start on my life and not need to worry as much about student loan debt. I want my children to have the same opportunities.