College costs keep rising. How much and how do you possibly fund it?
Tuition and fees increased an average of 6.4%
Room and board increased an average of 5.2%
Total average cost for 2008/2009: $18,326
Public colleges (out-of-state students):
Tuition and fees increased an average of 5.2%
Room and board increased an average of 5.2%
Total average cost for 2008/2009: $29,193
Private colleges:
Tuition and fees increased an average of 5.9%
Room and board increased an average of 4.8%
Total average cost for 2008/2009: $37,390
"Total average cost" includes tuition and fees, room and board, books and supplies, transportation, and other miscellaneous costs.
The College Board stated, however, that average cost is not necessarily representative of what most college students pay. The Board noted that there is considerable variation in price among institutions, and that almost two-thirds of undergraduate students enrolled full-time receive grants that reduce the actual price of college.
1. Maximize an ESA College Savings Fund – ESA stands for Education Savings Account. ESA allows for a maximum annual contribution of $2,000 per student. The earnings in the account grow tax-free as long as distributions are used for eligible expenses, which are not limited to college costs.
$2000 invested annually at 8% for 18 years equals $74,900
2. Buy a rental property –when your child is young, buy a property for multiple reasons:
§ it will appreciate at 3-5% for ten plus years before college money is due
§ rental rates will increase at 3-5% producing some cash flow to help with expenses
§ use it as a teaching tool for your child; help them learn to care for it, find and screen renters, manage the finances of the property, pay taxes, etc. This will be a life altering experience that will give them a leg up in a financial education deprived world we live in
$200,000 house appreciating at 4% over 10 years will be worth $296,048
$1200 in rent increasing at 4% over 10 years will climb to $1776
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