College Planning

Empty Your Nest, Not Your Savings

Do you dream of your child becoming a doctor? Or the next great lawyer? Of course, a well-paying, rewarding job is all you really want for your kids' future. The key for either scenario is a college education. But can you afford it? Helping to secure your children's future shouldn't come at the risk of your own.

You'll find a way
You know the importance of a college education. You know that without it, your children may be at a great disadvantage later in life. That's why, despite the skyrocketing costs, you also know that telling your kids, "Sorry, we can't afford it," doesn't have to be an option. It helps to understand the many options available to help fund a college education.

Price check
So what will college cost when the kids are ready to leave the nest? Consider that the average annual price of a four-year private college in 2013-2014 is $40,917 (includes tuition, fees, room and board); while the average annual price of a four-year public college, for in-state students, is $18,391.1

Now, multiply that by four years – and by each child. And don't forget to account for tuition increases, which have averaged about 5-8 percent annually, outpacing the inflation rate the last few years. At that rate, in 2024, the total four-year cost will be $357,370 for a private college and $160,627 for a public college!2 (Assuming a 7 percent tuition inflation rate).

To accumulate enough money to foot such a bill, setting aside money sooner rather than later is a good idea, even right after a child is born. As the following chart shows, to net even $50,000 towards college costs, you would have to save $100 a month beginning at birth. And the longer you wait, the more you'll have to put away each month to reach that same $50,000.

If saving begins when the child is: Born Age 4 Age 8 Age 12 Age 16
Amount you need to save monthly to have $50,000 at age 18* $103 $161 $271 $540 $1915

* Assumes 6 percent compound annual interest. Hypothetical example and not intended to represent the performance any specific product.

1The College Board, Annual Survey of Colleges; Trends in College Pricing 2013.
2FinAid, College Cost Projector,

Remember, all investments carry a degree of risk and past performance is not a guarantee of future results.

Save and study plans
The government has established a number of programs and tax laws to help make saving for college easier. A few popular options include:

Going to the source
Most schools offer some type of financial support for students who qualify, such as:

Other sources of aid from schools include work-study programs, merit awards for academic achievement, activities awards for involvement in various student activities and assistance for disabled students. Contact each school for its specific programs and policies.

Other options to consider
It's wise to carefully consider the advantages and disadvantages of all the options available to you. Some other options are:

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