Calculating the Cost of College
One of the hardest parts of saving for your child's college expenses is calculating just what those expenses will total. After all, you need to consider not only tuition and fees, but also room, board, books, and other expenses. Additionally, unless your child is entering college next year, you'll have to account for inflation for the number of years until your child is ready to attend. Here are some ideas to get a better financial picture of the actual cost of college.
Start with the School
Different colleges have extremely different costs for tuition. The College Board lists the average price for a public college at $6,585 for the 2008-09 school year, while listing $25,143 as the average for a private college. Location and other factors can also contribute to the price. Having an idea of which college your son or daughter is planning on attending can help you determine how much you need to save. If you do know which school your child is considering, you can often find the school's current tuition listed on its website.
Depending on how old your child is now, you may not know what kind of career he or she will want to follow, let alone which college your son or daughter may want to attend. If that is the case, using the College Board's averages can give you a ballpark number to base your calculations on.
Extra Expenses: Books and Housing
The expenses your child will have for school may vary, but the most important expenses will be room, board, and books. You can often find the amount for a specific college's housing and dining plan on its website. Currently, the cost of textbooks for a year can range between $700 and $1,100.
It may be a good idea to pad your estimates for expenses, as well. A variety of expenses are becoming more common at many colleges. For instance, many students are essentially required to purchase laptops in order to complete their courses. Transportation can also be a commonly missed expense. Whether or not your child has a car on campus or flies home for the holidays may have a significant impact on the bottom line for college expenses.
Figuring for Inflation
While the numbers you have may not be too far off for determining what your child's expenses will be if he or she is starting college next year, they probably won't be accurate beyond next fall. College costs continue to rise at a rate significantly faster than inflation. The increase has been averaging around eight percent each year. That means that for every $1,000 your child would have paid to go to school this year, he or she will have to add $80 to the total for next year.
You can estimate the total cost for your child's college education with the following formula: Multiply the current total cost for four years by 0.08, then multiply the resulting number by the number of years until your child starts college. Add that result to the current total cost for four years. That number is a ballpark figure for what you can expect your child's college to cost. For example, the current average cost for a student attending a public university, including expenses, could come to $10,000. In that case, the current total cost for four years would be $40,000. Assuming that the student in question won't start college for 10 years, inflation would add $32,000 to the total cost, bringing it up to a total cost of $72,000.
While that number is significantly larger, it may not be as much to worry about as you might think. The availability of financial aid has been increasing, along with the price of education. And, if you're saving money toward your child's education in a savings account that earns interest, you may be able to match inflation.