In this personal finance 101 series I want to focus on college savings for our children. I am a Millennial and our generation is drowning in student loan debt. The average college graduate is finishing school with nearly $38,000 in student loans. That is crazy and its taking most of us Millennials one to two decades to repay that.
Open a 529 for Your Child
I was lucky enough to become a dad for the first time this year in 2017, and I knew I wanted to get a 529 account up and running ASAP. I don’t use this personal finance blog to brag, but I would like to say that I am thrilled to state that I made my daughter’s first 529 account contribution when she was just 6 days old.
My goal for this post is to encourage all other Millennial parents out there to begin saving now for their child’s college education. Don’t let your child be in the same debt the rest of us Millennials are in. This is your chance to create a better future for your child…a future with way less student loan debt!
Cost of College in 2035?
College is expensive and that is not news to anyone. The problem is most college tuition rates have been increasing between 6-10% each year…way more than inflation. The cost of college is soaring out of control! I anticipate my baby girl to attend college around the year 2035 and the calculations I received off a few future college estimator calculators is utterly shocking.
I calculated the cost of attending two different in-state schools in my state; the first is my alma mater, which unfortunately is the most expensive state university in my state. And the second is a quality in-state university, a much smaller university, but one that is far cheaper, while still providing a quality education. I love my alma mater, but I am absolutely leaning towards the latter (cheaper) in-state university.
In-State Public College #1 (Alma Mater)
Tuition and fees alone I expect to cost approximately $170,000 in the year 2035, if I want my daughter to attend my alma mater. This cost is for four years of schooling.
If I want to cover all expenses, tuition, fees, room and board, I expect that to cost roughly $310,000 in the year 2035.
In-State Public College #2 (Smaller and Much Cheaper)
Tuition and fees alone I expect to cost approximately $92,000 in the year 2035, for my daughter to attend a smaller, in-state university (which I am 100% on board with…and I am encouraging this school actually). This cost is for four years of schooling.
If I want to cover all expenses, tuition, fees, room and board, I expect that to cost roughly $111,000 in the year 2035.
How Much to Save for Future College Expenses?
I don’t know if I can afford to pay for all of my daughter’s college education, but I am certainly going to save early and often so that I can help her (and my wife and I) to avoid as much student loan debt as possible.
If we simply save $50/month for the next 18 years, I estimate that we’ll have roughly $23,000 to put towards my daughters education. It’s not a lot, but that is 25% of school #2…which is better than nothing!
If we can increase that to $100/month, we could expect $45,000 by the year 2035.
And if I can double that to $200/month, we could expect $90,000, which would pay all tuition and fees for school #2.