Despite a decade of low inflation, the price of higher education has
seemed to defy gravity. According to The College Board, a not-for-profit
membership association whose mission is to help students and parents prepare
and pay for college, tuition and fees at both private and public
institutions have nearly doubled in constant dollars over the last 20
years.1
But a college education is clearly an investment that pays big dividends
down the road. The College Board, citing U.S. Census Bureau statistics,
estimates that individuals with a bachelor's degree earn over 70% more, on
average, than those with only a high school diploma.2 Over a lifetime, that
earnings gap translates into more than one million dollars - more than
enough return to justify the investment, even if the rise in prices is
outpacing inflation.3
Help is on its Way
The College Board's latest annual report, "Trends in Student Aid 2005,"
reveals that $129 billion was distributed to students and their families
from federal, state, and institutional aid sources. That's an increase of
$10 billion over 2004.
The average cost of tuition and fees at a four-year private institution
in 2005-2006 is estimated at $21,235, up 5.9% from last year, while a
four-year public institution will run $5,491 for 2005-06, an increase of
more than 7%. Add in room and board, books, travel expenses, and other
miscellaneous costs, and one thing becomes clear: Funding a college
education for your children is going to take some careful planning and
long-term dedication.
Some parents, especially those of young children, put off planning on the
assumption they can make up for lost time later. Even if your children are
very young, however, it's not too soon to begin thinking about ways to
prepare for helping them with the rising costs of a higher education. Given
the proven power of compounding over time, starting early to save smaller
sums of money each month can make a dramatic difference in the amount you
can manage to put away over time.
1,2,3,5) "Trends in College Pricing 2005," The College Board
4) "Trends in Student Aid 2005," The College Board
