If you’re an adult, there’s a pretty good chance you have a small group of munchkins running around that you sometimes admit are your children. They maybe young now, but some day in the future, they’re going to have to have to leave the nest, and go to some sort of college or technical school. Of course these things are not free, college costs money, and it’s costing more money every year.
The cost of tuition increases on average 7% annually. This means that you will have to save 2 to 3 times the amount of money the child would if he or she went to college today. It might be a bit less than that if your student is already a teenager. So where is this money going to come from? The way I see it, you have a few different options.
When going into this, just remember that it’s not mandatory to pay for all of your children’s college. In some cases, you are better off to make them pay for it themselves. This will force them to learn what they need to know about personal finance so that they can continue to afford go to school. It will also better encourage them to apply for scholarships if they have to pay for it themselves. When you pay for a child’s college entirely, often times it get wasted and your son or daughter will end up drinking themselves out of school and it does happen more often than you think.
This doesn’t mean that you can’t pay for some of your student’s college education. A good compromise is to pay for half. This way your student will either have to work hard and get scholarships for the rest, or they will have to find a part-time job. If you remember your consumer math, you can figure out how much it will cost for your student to go to school by seeing how much tuition, fees, books and board would go for today at an in state school and multiplying that by 2 or so. Next put out a savings calculator and see how much you would have to save at with about 10% interest. Go open up a 529 college savings plan or an educational savings account, and start putting a set amount in that each month for your children’s college. When their times has come to go to college, them money will be there for them.
There are some instances when it is okay to pay for all of your children’s school, but these cases are few and far between. If your child has taken an active interest in money and are good at managing what they have, and has demonstrated that they are committed to their education (scholarships, good ACT scores, good grades), then there’s not much of a problem paying for your children’s college, because then you will know that they won’t mess it up. It’s also a good idea to say that you’ll only pay for their college if they maintain a 3.0 grade point average, and if they don’t, the mom and dad scholarship goes away. This will help keep them focused on their schoolwork.