Can't believe they didn't suggest a education trust... My college was paid in full using a Michigan Education Trust. So happy my parents did that!

this would probably work unless your kid dicks up his first major then changes to another one and will end up taking 8-9 years to get a bachelors...
i know a little something about that.
don't switch from a 5 year program to undecided to another 5 year program! i'm gonna be in debt forever.

This negates the fact that the cost of higher education is going up. If you put 50 away per month the percentage that that will pay for is going to go down signifcantly over the course of the next 18 years.

That also assumes that there are no scholarships/aid. Or, working your way through college (I did so almost full time and still graduated in 4 years).

You could also just let them pay for their own college like my parents did instead of spoiling them. There are plenty of state and federal student loans and grants available. This method teaches them the value of a dollar and also makes them less inclined to party every night and flunk out since they are paying for it themselves. It is not the parent's responsibility to pay for college

@exploded: I'm not even sure how many colleges you can finance with only $60k NOW. $200 a month is already practically a car payment. I would suggest upping the $50 a month plan. It seems like you have space more to play with there.

Or, just make them join the Army (or Navy, or Air Force, etc...)

Isn't there a statistic that says college tuition increases by 8% every year so in 18 years, they would need to pay $239,761.08 for an "average cost of attending four years at a public university"?

could you even imagine? scary!

This is a lovely concept but as a parent who has been putting money in a 529 account since her 8 year old was born those statements are just as depressing as the 401k's are to people wanting to retire.

Glad I'm not having kids, I'll use my 60,000 for college for a corvette, and the 350,000 it costs to raise a kid for a nice house.

I had a financial aid counselor tell me that as long as the Pell Grant/student loan programs go up each year, so too will tuition. No one has figured out that if you cap those programs, it might stop tuition from going up.

@TinkishDelight: The article has an inflation calculator. I used the $15k value and college in 18 years. Their problem is that they assume the rate of cost inflation will be 4%. The problem is that the real rate has been 5-8%.

I used 6.5% and it says that college would cost $120k rather than $60k. At that point, your $20k from their plan goes from being 1/3 of the tuition to a puny 1/6. If you want your contributions to keep track with inflation, by the 18th year you'll be paying more like $150/month.

Or, unless your child is a modern day Einstein, encourage them to stay at home and make use of the local post-secondary education facilities. Then there's only tuition to pay for, and unless your local college is actually Harvard, you'll be looking at less than $6-7k per year. And possibly only 3 years of study, as well.

I suppose that's just too practical...

@danger the pirate ★♥ has a fake star and a fake heart. (tha...: I feel you! I went from PoliSci to Biology?? At least you didn't end up stuck committing to something for the rest of your life that was never the right fit!

@Gorphlog: agreed, I'm paying back hefty student loan debts now but felt it was worth it. I also handled my loan, grant and scholarship applications entirely on my own which was a huge educational experience for me.

@JP Meyer: Oh, and let's not forget that it's highly, highly unlikely that salaries will be going up at the same rate as tuition increases, so that $200/month in loans will be more like $400-500/month.

They're saying to save up $60,000, but also say that's TODAY's cost of a college education. How in the world will $60k cover a college in 18 years?

Methinks they missed a step in their logic.

I believe the $60k number accounts for tuition/books/room/board, there is no way a *typical* public university cost $60k for four years. I only paid $2k per year for tuition, granted I graduated in '02 from a California State University but still, it hasn't gone up that much. I was on my own for all my college related expenses so I lived at home for the first couple of years and was able to get grants and loans to cover most of my expenses.

I have two kids now and I would like to be able to help them out with their tuition later but room/board/cars/etc will be up to them, unless grandma kicks down some.

@spoco: Totally agreed. The easy availability of student loans, grants, and scholarships has created an "arms race" among universities, who fight to build the fanciest dorms, nicest classrooms, and newest buildings, and then charge us for the privilege. The higher tuition goes, the more we borrow, and the more university spending spirals out of control. They're out to make money, and since we've shown we'll borrow $100k to get a Sociology degree, they're going to keep raising tuition.

@HRHKingFridayXX: Yeah, this. The kid will do a lot better if they're paying their own way, not to mention the benefit of work experience along with the degree.

@JP Meyer: Sorry, I can't get enough of this. Using realistic values of $20k/year and an inflation rate of 7.7% (the calculator hides these averages, but shows them if you click on the expand button), we get up to $200,000 for 4 years of school. Seriously, how can you pay off a $70k loan right out of school? That's $800 per month at 10 years at 6.6%!

@Saboth: Don't forget to save an additional $350,000 to pay for someone to take care of you since you won't have kids to take care of you in your old age.

@Gorphlog: No, it sure makes it easier to study when you aren't waiting tables every night. College is still a luxury and privilege for a lot of people, and the cost of it isn't making it any easier. I'm okay with parents wanting to provide for their children.

By all means, save for your children's education. But do not do it at the expense of saving for your own retirement!

When the time comes, there are multitudes of alternatives available for paying for college (work your way through school, go to an inexpensive school, low interest loans, scholarships).

When the time comes for you to retire, your standard of living depends entirely on what you have been able to put aside for yourself.

So don't start putting money into that 529 until you've maxed out that 401k or IRA.

@JP Meyer:
Figure I have been out of college for 4 years and tuition since I have gotten out has gone up 35%.

Needless to say, my brother isn't too happy paying what he has to!

You can also live in a state (like Florida or Georgia) that pays for education through money from lotteries.

@Quake 'n' Shake: My kids will be able to go to the state college of our current state, or whichever college the DoD is willing to pay for them to attend.

College has become RIDICULOUSLY expensive.

@Gorphlog: I get what you're saying about teaching kids the power of money, but I don't see how paying for a child's education spoils them. Besides, a kid's tendency to party has very little to do with whether or not their parents are paying for college. A student working full time will still find room in their schedule to party (with enough Adderall) is he or she is so inclined.

Teaching the value of money and a good work ethic early on does wonders. Waiting until they are 18 to start then setting them free at college is generally why so many kids flunk out.

I say make them pay! My husband paid for his with loans and scholarships; good reason to keep that GPA above 3.0! I paid out of pocket for the couple years I went before we got married. We feel that its made us more productive people; education wasn't just given to us, we had to earn it.

If we ever have kids, we're not going to pay for their tuition no matter how much money we have because we want them to learn the same work ethic we had to.

*If he or she is so inclined.

@Gorphlog: I sort of agree, but if I was a parent I might volunteer to pay half or something. I would really hate to see my kid graduate with $150,000 in debt (and that's not abnormal here in the Boston area).

My wife and I were lucky enough to get married with no debt, but I really feel sorry for younger folks who start out in the negative trying to work their way out of a hole this big. Then they get married and the debt can be taxing on a relationship.

@Saboth: I'd rather have my daughters than a couple of Veyrons and mansions.

To each is own.

my parents had my college completely paid for before i even went. as long as i went to a SUNY university and not a private school directly after graduating high school they paid full boat.
and i became an RA to help them out with bills since i didn't get a scholorship, and they ended up paying for my books and an extra 500$ a semester from the 3000$ i was saving them :D

@Robobot: I agree. Also, kids saddled with $60,000 in debt after college probably won't make for the happiest of adults. Imagine leaving college, getting an entry-level job, potentially being in an expensive area with a high cost of living, and worrying about money all the time because you have $60k in debt right out of the gate.

@shepd: I did this, paid $5,000 a year, and avoided debt completely. Granted, I'm not Einstein, and the college sucked, but since when do you go to college for the pretty landscaping? You go to learn, and I most of *that* is what you put into it.

My brother's kids were made to save half of every dollar they received as gifts or earned as income from the day they were born. My niece started college with nearly $40,000 in savings. She's working part time while she goes to college and will finish up with no loans and some money still left in the bank.

Kids should be saving their money for college at an even higher rate then their parents are.

IMO, the key to affording college is to get accepted into the best college possible. If you can get into any of the top 20 or so universities in the country, you will definitely pay less than you might at the local state school.

Top schools have the endowments to give lots of financial help to good applicants including grants that you don't have to pay back. Seriously, if you are poor and a really great student, you can probably go to Harvard for free.

I guess my point is... the better your grades, the less you will probably have to pay. I think parents should focus more on grades and opportunities, the money will work itself out.

@Megan Squier: I know it sounds harsh but its what made us who we are. How many early 20 somethings do you know who are homeowners with little help from family? My dad put in $500 on a riding lawn mower and that was it.

If we did contribute any we would still make our kids earn it by keeping their grades up, kind of like a scholarship.

Also if our kids were vocationally inclined and really didn't know what they wanted to study in college we would encourage them to learn their desired trade first and then go to college if they so choose.

@Saboth: This is one of the reasons I'm scared of having kids :(

Please direct me to a reliable 6% rate of return in this economy. kthnxbye.

My proposal is to put away $25 a month and assume a 15% rate of return..... see how easy that was?

@Saboth: Seconded. I'll gladly trade the extra money for the retirement home for not having to deal with the hassle of parenthood.

@Gorphlog: Paying for college isn't a responsibility, but it will be my choice. I worked full time while going to school full time and I would prefer that my kids get more out of college than that.

They are in elementary school and already know the value of a dollar.

Parents should do what they think is best. If they think paying is best, or not paying, or something in between, good for them.

A 6% annual return? Awesome! Where do I sign up for such an awesome interest rate? And it's a good thing the cost of education doesn't go up from year to year, or you might find it costs a lot more than 60 grand to go to college in 18 years.

@Megan Squier: Well, you know, a good work ethic is also a good reason to keep a GPA above 3.0. It's like saying people who are in poverty have better work ethics than people in the middle class. No, success is earned by those who want it, regardless of whether you paid for it yourself or your parents.

Education isn't just given to anyone - you actually do have to earn it, by actually being able to get in on your academic merit, and you also earn it by having the desire to do well. Plenty of people who pay their own way in college have crappy work ethics and spend most of the time not studying, plenty of people who had their college paid for by their parents spent most of their time studying instead of being lazy. It goes both ways, and there's no reason why those who had to pay their own way are somehow better.

@Gorphlog:
Odds are if you are waiting until the child is 18 to teach them the value of a dollar, it's too late and they won't do anything but rack up credit card bills once in school. Kids who are responsible respect the fact that their education is expensive and will try to get out as quickly as possible.

My parent's helped with my education and I appreciated every dime they spent. I got out of my undergrad in 4 years and worked hard the whole way through. They saw it as a gift to help me be successful in a way that their parents could only hope to have done.

I paid for my MBA on my own, but was able to do so because I was not drowning in debt.

It's a college education, not a brand new BMW. It's not spoiling your children to help them with education and it bothers me to see people feel that way. I'm sorry that your folks couldn't help you, but why wish that hardship on your children if you are financially able to help them avoid it?

@shepd: Post-secondary education facilities...like community college?

You can save a TON of money by going to any number of colleges or universities that are nearby. One of my goals whenever I may have kids is that when they get closer to high school age, I want to move to an area with a lot of desirable colleges. In state tuition is a lifesaver, and if there's a good college in the area, little Pecan Pi can live at home if he/she chooses, especially if loans are involved to pay for college. Room and board is outrageous.

@jscott73: $14k a year for college here. Private university, no in-state or out-of-state rates.

@pecan 3.14159265:

then perhaps the kid will go to a cheaper school or work while going to school or take other means to reduce the cost of going to school (like living at home while attending college).

@JP Meyer: don't forget that your likelihood of earning 6.5% on your investment is about as good as the prospect of inflation staying at 4%. or more accurately, that college costs are going to stay in line with inflation.
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