Why Should I Save for College?

College Degree Finder

There are not many investments you can make that are better than an investment in education, specifically a college degree. Going to college can open doors you never imagined and create a world of opportunity. And the key to being able to afford to go to college is making sure start saving early and regularly.

The Rising Cost of Education

According to the National Center for Education Statistics, the estimated undergraduate tuition, fees, room, and board for the 2014-15 academic year were estimated to be approximately $16,200 at public institutions, $42,000 for private nonprofit institutions, and $23,400 at private for-profit institutions.

Even with the average first-time, full-time Title IV undergraduate financial aid award included ($11,380 average for all school types), the annual net price of tuition, fees, room, and board for 2014-15 was still $13,220 for 4-year public institutions ($7,060 avg award), $25,360 for 4-year private nonprofit institutions ($20,090 avg award), and $21,500 for 4-year private for-profit institutions ($5,190 avg award).

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An interesting thing to note is that between the 2004-05 and 2013-15 school years, undergraduate tuition, fees, room, and board at public institutions rose 33%. Prices at private nonprofit institutions rose 26% during the same timeframe.

Saving now, even a little bit, and allowing your money to grow, will help you be financially prepared when you, your children or your grandchildren are ready for college. Most people don’t realize that putting away just a few dollars a month (the cost of going to a fast-food restaurant just once) into a college saving plan over ten years can yield enough to pay for a college education.

Education Is Worth The Cost

According to the U.S. Census Bureau, professionals who earn a college degree earn an average of $1 million more during their careers than high school graduates.

  • Earnings of 4-year college graduate MEN were 66% higher than median earnings of high school graduates.
  • Earnings of 4-year college graduate WOMEN were 67% percent higher than median earnings of high school graduates.
lifetime earnings by education attainment

A Little Saving Can Go A Long Way

  • Setting aside just a small amount on a regular basis is the key to saving for college.
  • If you begin saving $50 a month in an account that earns 7% interest per year, you’ll have nearly $22,000 in just 18 years.
  • Is a college education worth what you’re currently paying monthly for your cable TV OR internet service?
College Savings Graph

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Reducing Your Student Debt

The large majority of students in the United States rely on loans and other forms of debt to finance their college educations. Even though most student loans have very low-interest rates, over a long period of time even small interest payments add up to a considerable amount of money. By saving for college early, you’ll be able to dramatically reduce your reliance on debt, eliminate costly interest payments down the road, and even reduce the cost of your college education by allowing interest to work for you, not against you.

student debt chart

Sources


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