According to The College Board®, the average increase in tuition and fees at public four-year colleges in 2012-13 was 4.8 percent for in-state students and 4.2 percent for out-of-state students.
If college costs were to increase by 5 percent per year, in ten years you can expect to pay $57,871 over four years at a public college and $194,281 over four years at a private college.
But don't despair. The cost of college remains within reach of many American families, especially those that start saving early.
Saving for College with Compounding
Don't be daunted by the amount you may have to save. Small amounts of money, if invested early, can become sizable investments through the remarkable power of compounding. For example, if you save $200 a month at an 6 percent annual rate of return for your newborn child, you will have more than $76,000 for college when they turs 18. Use the FINRA College Savings Calculator to see how early and regular saving can make your money grow.
Estimate How Much You’ll Need to Save
Use our College Savings Calculator to see how early and regular saving can make your money grow. When estimating future college costs, remember to factor tuition, room, board and books into your calculation. If you know where you want your child to go to college, but don't know the current costs, you can use the National Center for Education Statistics' school locator to research the costs. If you are unsure where you want your child to go to college, you can get national public and private school averages from The College Board.
Don’t Forget Financial Aid
As part of saving for college, you need to know whether your child will be eligible for financial aid, which reduces what you may need to save for college.
Student Aid on the Web provides details on federal student aid programs, including grants, campus-based aid, work-study programs and loans. The Department of Education also streamlined the process for applying for financial aid, enabling parents and students to submit the Free Application for Federal Student Aid (FAFSA) online and monitor results. Another helpful website for understanding financial aid and determining eligibility is FinAid! The SmartStudent™ Guide to Financial Aid.
For more information and other smart saving tips visit the FINRA Investor Education webpage.