Having a baby soon? Congrats! Now you can begin the 18-year process of saving for college (not to mention the even more costly option of paying for their upbringing.) Luckily for you, the New York Times has a simple formula that makes the saving process as painless as possible, requiring only small sacrifices (over a long period of time). They dub the approach “20-20-20” and it goes like this:

Take the current average cost of attending four years at a public university: roughly $60,000. Save $20,000 before your child begins college by putting aside $50 a month starting at birth and assuming a 6 percent annual return. Then, pay $20,000 out of current income while the student is in college. Finally, have your child take out $20,000 in federal student loans over four years. The $200 monthly payments afterward are not a horrible burden for people in their 20s to bear, and they’ll be debt free once the 10-year payback period is over.

This seems like a reasonable and workable approach, though maybe they should have called it “1/3-1/3-1/3” for the three equal shares you hope to use to pay the total cost.

And for those of you that don’t like one of the thirds (or haven’t yet saved anything and are close to college than 18 years), you can “simply” eliminate or reduce that third by putting more into the other two options.

18 Years in the Making [New York Times]

— FREE MONEY FINANCE (Photo: vndrl)

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