Another season of holiday giving has passed. New Year’s resolutions are foremost in our thoughts. With the arrival of our first child in November, my husband and I have resolved to give our child one of the best gifts we can – the opportunity to receive a college education.
Why think about college costs that are 18 years down the road? Because advance planning can ease the burden when it comes time to write checks for tuition, books, room and board, and all the other costs associated with sending your child to college.
Consider that current college costs are approximately $10,000 a year at a public university. Using a conservative estimate of tuition increases at 7 percent a year, the projected cost of a four-year education in 17 years can skyrocket to more than $140,000.
According to Ron Mathews, principal at Lake Highlands High School, 60 percent of the parents he deals with are not financially prepared for college expenses. Some have saved and are prepared to write checks that first year. The majority must depend on student loans to ease the burden.
Starting early is the key. With more time to plan, you can benefit from long-term savings plans and invest more aggressively. Your child’s first birthday is the perfect opportunity.
Set up a separate college savings account to avoid the temptation of using these funds for other purchases. A separate account also will encourage regular investments to the college fund.