With the start this week of the NCAA Men’s Basketball Championship Tournament, the drama of a 68 college single elimination tournament is keeping many of us on the edge of our seats. As you cheer for your favorites this week, you may not be thinking about the cost of college – but here’s a fun bracket that shows you how the NCAA schools measure up, tuition wise.
These numbers may come as a shock to some parents, but the cost to attend a university increased nearly 8 X faster than wages did. 1. Before you throw your hands up in the air and send junior out looking for a job, you might consider a few strategies to help you prepare for the cost of higher education.
First, take advantage of time. If you put $100 a month toward your child’s college education, after 17 years’ time, you would have saved $20,400. But that same $100 a month would be worth over $32,000 if it had generated a 5% annual rate of return. 2. The bottom line is, the earlier you start, the more time you give your money to grow.
Second, don’t panic. Every parent knows the feeling—one minute you’re holding a little miracle in your arms, the next you’re trying to figure out how to pay for braces, piano lessons, and summer camp. You may feel like saving for college is a pipe dream. But remember, many people get some sort of help in the form of financial aid and scholarships. Although it’s difficult to forecast how much help you may get in aid and scholarships, they can provide a valuable supplement to what you have already saved.
Finally, weigh your options. There are a number of federal and state-sponsored tax-advantaged college savings programs available. Some offer prepaid tuition plans and others offer tax-deferred savings. 3. Many such plans are state sponsored so the details will vary from one state to the next. A number of private colleges and universities now also offer prepaid tuition plans for their institutions. It pays to do your homework to find the vehicle that may work best for you.
As a parent, you teach your children to dream big and believe in their ability to overcome any obstacle. By investing wisely, you can help tackle the financial obstacles of higher education for them—and smooth the way for them to pursue their dreams. And if they happen to be a great basketball player, well, we’ll see you on the court sometime.
- Forbes, Price Of College Increasing Almost 8 Times Faster Than Wages, July 24, 2018
- The rate of return on investments will vary over time, particularly for longer-term investments. Investments that offer the potential for higher returns also carry a higher degree of risk. Actual results will fluctuate. Past performance does not guarantee future results.
- The tax implications of education savings programs can vary significantly from state to state, and some plans may provide advantages and benefits exclusively for their residents. Please consult legal or tax professionals for specific information regarding your individual situation. Withdrawals from tax-advantaged education savings programs that are not used for education are subject to ordinary income taxes and may be subject to penalties.