When your family assembles for dinner next Thursday, will a newborn be among the blessings for which you give thanks? If so, congratulations!
Of course you want that baby to lead a life of achievement, fulfillment, and prosperity. To do that it’ll need, as President Lyndon B. Johnson said, all the education it can take. For as he observed, “education is no longer a luxury. Education in this day and age is a necessity.”
Mr. Johnson was referring to postsecondary education. It’s costly now and it’ll be even more expensive when your baby is 18. If current trends continue, freshman year at a public 4-year college or university in 2034-35 will average $59,111 — 71% of what’s projected to then be median household income.
So if you’re like most Americans, you’ll not be able to cover all these costs from what you earn while your child’s in college. Therefore, you need to begin investing for college now.
Consider this: if you can only afford is to deposit $100 a month in a regular 1% interest-bearing savings account through your newborn’s 22nd year, you’ll generate $29,500 for college. If, on the other hand, your baby borrows $29,500, even at today’s student loan interest rates, repaying that debt could cost as much as $48,472.
Also, research shows that low and moderate-income students are three time more likely to enroll in and 4.5 time more likely to graduate from college if they have college savings accounts.
There are investment opportunities that generate much higher returns than a regular savings account. However, your unique needs and circumstances should guide your college investment strategies, and rules regarding these opportunities constantly fluctuate. So if you can afford it, you may want to consult a qualified investment professional before making this choice. Another good source of information is the Financial Industry Regulatory Authority’s Saving for College website and its related links.
You’ll want to employ various strategies to help make the rising price of postsecondary education more affordable, but Investing should always be among them. And the longer your money is invested, the more it’ll generate for your child’s education. So start putting aside as much as you can afford now!
If you have questions about other ways to help make your child’s college education more affordable, College Affordability Solutions provides free consultations. Seek these by calling (512) 366-5354 emailing firstname.lastname@example.org.