That's what a top tier college costs today.
Not only that, but a very large percentage of students take more than four years to finish school - usually five!
Five years at $45,000 a year. That's $225,000.
Can you believe that? I went to the Harvard and Standard web sitees and check the tuition rates myself - it's true - $45k.
Here are some questions I ask myself:
1. Will my children get into top tier private schools?
2. Will they go to less expensive state schools?
3. If they can get into a top tier private school, will I pay for it?
4. Should my children pay or take on debt for any of it?
5. If they can't finish in four years, should they be responsible for subsequent years?
6. Will the added financial responsibility motivate them or imperil and distract them?
7. Is it reasonable to expect a college student to be able to either:
a. earn $45k in one year to cover expenses
b. take on $45k (or more) in debt, knowing that it might be the equivalent to a well paying staring salary
What tough questions.
If I want to cover $225,000 of today's dollars, I'll need to invest between $12,000 - $13,000 per year per child in today's dollars (increase that amount about 7% per year due to academic inflation (I'm not sure if the calculation incorporates current savings) - that will be in a future update.
Somehow, I had used an on-line calculator - perhaps one that had been associated with Quicken - though I don't recall. It had predicted college expenses of $30,000 per year (much less than $45,000).
We're pretty good savers, but this means I'd need to save twice what I was planning for each of my three children (from $18,000 a year to $36,000 a year). I'm really not sure if:
1. I'll be able to do that consistently
2. I don't think I'd like that much of my non-retirement assets locked into a 529 plan - what happens if my children earn academic scholarships, get into West Point, etc....
It's very disappointing when you think you're on the right track and your balloon pops!
If I increase savings to $36,000, I'll effectively cut our current monthly out of retirement savings in half. The again, my new job will allow us to save more - I'm just not sure how much more -especially after my wife takes a new job.
What would you do?