How to save and pay for the increasing cost of tuition
It’s that time of the year where students are making their final choices on where to attend college next fall. Regardless on if your student is wavering between an in-state and out-of-state option, or just entering kindergarten, you may be wondering what it’s going to cost you.
Colleges estimate the total cost to attend their institution for a single year in a figure called the Cost of Attendance (COA). This does not include any grants, financial aid or scholarships.
Generally, colleges include the following expenses in their COA:
- tuition and fees
- room and board
- books and supplies
- transportation and personal expenses
The average cost of college in the United States is $35,720 per student, per year. The cost has tripled in 20 years, with an annual growth rate of 6.8%. Taking into account student loan interest and loss of income, the ultimate cost of a bachelor’s degree may exceed $400,000. Many would argue even more when it comes to dental school.
Although the COA covers four categories, we will break it out by the two biggest categories, college tuition and fees and room and board.
For the 2020-2021 academic year, the average price of tuition and fees came to:
- $37,650 at private colleges
- $10,560 at public colleges (in-state residents)
- $27,020 at public colleges (out-of-state residents)
It’s also important to keep in mind that you will need somewhere to live. The cost of room and board depends on the campus housing and food plans you choose. For the 2020-2021 academic year, average room and board costs are:
- $13,120 at private colleges
- $11,620 at public colleges
Let’s face it. College isn’t cheap. Even with a concerted effort to fund a 529 Plan each year of a kid’s life, many parents find they still don’t have enough to foot the bill.
Findings from a recent Fidelity Investments’ College Savings Indicator Study revealed that although many parents are saving earlier, it’s still not enough: More parents are starting to save before their child reaches the age of 2. Of the 37% that do that, just 28% of them are on track to meet their college funding goals.
Whether the 529 is just a semester or two shy or the college fund is still at zero, taking money out of your retirement to pay for it is one quick way to detail your retirement savings. Learn more about this and other mistakes that can take you off track in our new blog.
So, what can you do to get ahead or catch up? 529 savings are one way, but here are some other good ways you can save or pay for college with tax-deductible dollars.
Are you on track to meet college funding and other long-term goals? It’s time to feel confident in your financial plan. Reach out to our team at cainwatters.com/contact.