Back to school is on the horizon, and as Ben Franklin once said, “An investment in knowledge pays the interest.” Whether it’s your child’s education or your own, proper planning can help fund the search for knowledge. Higher education may be a distant dream you hold for a child, or a financial imperative staring you in the face. Either way, you can take immediate steps to begin meeting this challenge.
To project your funding needs, define your education goals in specific terms. For example, if current trends continue, the undergraduate degree will soon be viewed as a minimum standard, with graduate-level or professional education a requirement for a successful career and long-term financial stability. You may want to plan to fund only your child’s undergraduate education and leave the responsibility for the cost of post-graduate work to the student. Or you may want to consider financing a less expensive undergraduate degree and allocating the majority of your educational investment to prestigious graduate or professional school.
In addition, many college programs are designed for students to graduate in more than four years. You may want to plan from the beginning to cover the costs of a five-year degree. Also, are you preparing for a public or private education? The $100,000-plus four year undergraduate education is a reality today at top private universities, and that figure is expected to exceed the quarter-million mark before today’s infants reach college age. The cost for four years of undergraduate education at an in-state institution will exceed $150,000 for a child born today. And those figures only include tuition, fees, and room and board. Personal expenses, extracurricular activities, transportation, books, and supplies may require additional funds. When planning, you should prepare for annual increases of seven to nine percent in college costs caused by inflation. Of course, saving money anyway you can, say on auto and home insurance is a good start too.