Most parents are faced with the challenges of not being able to send their children to college. This is because of the enormous rise in tuition rates that has shown no sign of letting up. The bitter truth is that the cost of obtaining a college degree is becoming increasingly unreachable.
Tuition Growth Rates
A recent study carried out by a prominent investment management company has proven that ‘tuition has been rising annually by about 6%’. A careful look at this rate will bring one to a very big reality. Ever imagined what the reality might be? Sure, when today’s babies get to the age of 18, obtaining one year of education at a private school will cost more than $120,000. By then, public schools would be around the average of $54,000 yearly.
Funny enough, the official price of a 4-year college degree for the children that are being given birth to today may be unaffordable. If there are no financial aids, it can even get up to half a million US dollars at private schools plus a quarter at public ones. That is just for a family with a kid. How about those with more than one? Sure, they will face bills that may be up to seven figures. Ever thought of how much a year of college would cost in the nearby future? Well, one of a must answer questions for virtually all new parents is ‘how much do they need to save in other to train their children to college.’ It is because children would always aspire to go to college without taking a look at the ‘sticker price.’
Over the past few decades, different factors have been considered and blamed. Some of these factors are basically due to the declining rate of funding for public schools, and poor financial planning. Administrative bloat, increasing salaries and new construction going on in different private colleges, etc. are also among these factors. Amusing still, income has not kept up. In 2015, one of the studies carried out by experts showed the median income for families with children rise by 4.3%, and in 2014 by 3%. Let’s assume that family income continues to grow by 4.3% each year. Then the probability that it will get up to about $142,000 in 18 years is very certain.
How To Plan
The constantly rising cost of a college degree is a daunting task, especially for new parents. Because most of them still have their college debt to pay off. Additionally, they are being advised to save about 10% to 15% of their income for retirement. One might be tempted to ask: should most people skip college? 70% of students are getting money and paying less than the so-called “sticker price” is still finding it difficult. Funny enough, $121,000-per-year private college looks like an option for only the rich. This is because private schools account for only about 30% of undergraduates while the remaining 70% are from the public. In whatever way, this scholarship money is not enough, even for those in public colleges. A large number of undergraduates is borrowing money already. Studies have shown that those in public colleges already owe an average debt of $26,800 and those at nonprofit private colleges, the average is $31,400.
These days, there is now proper college planning coupled with the enormous amount of pressure to minimize the cost of tuition than the rates in the past 20 to 30 years. The College Board’s cost calculator has rightly stated at a 4% growth rate. Four years of college will cost up to $185,000 for a public school plus $363,000 for a private college for a student.