It has become a big worry for most parents: How can they save enough money to help pay for their children's college education?
Students today can take advantage of many loans, grants, and scholarship opportunities to help them cover higher education costs. However, even with these financial tools, paying for college can be overwhelming.
Simply put, college tuition continues to rise, far outpacing inflation. Also, many college students who have to rely too heavily on student loans leave college burdened with tens of thousands of dollars -- or more -- worth of debt.
Fortunately, parents can take some measures to ease the financial stress that their children will face when starting college. It all comes down to creating a college savings plan early.
College Costs
Between the 1994-95 and 2024-25 academic years, the cost of attending college has risen significantly. According to the College Board's Trends in College Pricing 2024 report, the average published tuition and fees (adjusted for inflation) have increased as follows:
- Public two-year in-district institutions: from $2,780 to $4,050.
- Public four-year in-state institutions: from $5,740 to $11,610.
- Private nonprofit four-year institutions: from $24,840 to $43,350.
These figures highlight the substantial rise in college costs over the past three decades.
Average Published Tuition and Fees for 2024-25
- Public four-year in-state: $11,610, a $300 increase from 2023-24 (2.7% before adjusting for inflation).
- Public four-year out-of-state: $30,780, a $940 increase from 2023-24 (3.2% before adjusting for inflation).
- Public two-year in-district: $4,050, a $100 increase from 2023-24 (2.5% before adjusting for inflation).
- Private nonprofit four-year: $43,350, a $1,610 increase from 2023-24 (3.9% before adjusting for inflation).
Net Tuition Trends
It's important to note that while published prices have increased, the average net tuition and fees paid by students, after accounting for financial aid, have been declining or stable in recent years. For instance, in 2024-25, the average net tuition and fees paid by first-time full-time in-state students at public four-year institutions is estimated at $2,480, down from $4,340 in 2012-13 (adjusted for inflation).
Despite these trends, the overall cost of attending college remains a significant financial consideration for many families. It's crucial to plan ahead and explore all available financial aid options to manage these expenses effectively.
Of course, this assumes that college costs will continue to rise at their current rates. That might or might not happen. However, as a parent, you must consider that college costs will continue to soar. It is the only way to ensure that your children will not be overburdened with student loan debt when they graduate.
According to EducationData.org, the average student loan debt for the Class of 2024 was $40,681
It is not easy for graduates to get started on their new lives with those high student loan bills. Many will struggle to find jobs or work entry-level positions that don't pay much. Moreover, it is a good recipe for long-term debt problems.
Fortunately, saving for college does not have to be impossible for most parents.
Start Early
The key is for parents to start saving for college as early as possible. That way, parents will not have to put too much away every month. If your children are still in elementary school, for example, you can get away with stashing as little as $50 a month in a savings account devoted to your children's college education.
You can also take advantage of savings vehicles designed to help parents save for college. Some of these programs include the Coverdell Education Savings Account program and 529
College Savings Plans.
Where do you find that extra money for college? Maybe you can cut back on eating out. If you take a lunch to work each day rather than hit the local fast-food restaurant, you could save $40 or so a week. Those are dollars that can go to your children's college education. Maybe you can give up that gourmet coffee on the way to work or cancel subscriptions to magazines that you no longer read. You might also give up or reduce your cable-TV service.
It is also never too early to begin researching potential scholarships and grants. These programs can take a hefty bite out of the cost of a college education. Scholarships today are not only available for sports or athletic achievements. Students can receive scholarships based on their skills in foreign languages, community service, or writing talents. Parents just have to research to find a scholarship program that fits their children.
These seem like small steps, but they can add significant savings. The key is to start taking these small steps as early as possible. Saving for your children's college education too late can make the task seem financially overwhelming.