How much will I need for my kid’s college education?

College cost 2030

I was just thinking about my two daughters and their future. As a small business owner, sometimes I get wrapped up in the day-to-day finances, without thinking about the future .It’s really important to try to help set our kids up for success.

I think we can all learn a lot from life, books, and e-course, but right now, a college education still does a number of things:

  • Meet like-minded individuals who want to improve academically.
  • Build relationships with families that value education.
  • Learn how to learn.
  • A credential that is universally acknowledged.

What will college cost in 2030?

College is not for everyone, but I want it to be an option for my kids. As a father and business owner, I want them to have as good or better opportunities than I had.

With that said, according to a US News Report, the average cost of a college education in 2030 will be $205,000 at a state four year college. They state,

According to the US Department of Education, the average annual cost of public school increased 6.5 percent each year over the last decade. That means that by 2030, annual public tuition will be $44,047. The total cost for a four-year degree will be more than $205,000.

What is the average stock return for the last 20 years?

In general, the stock market is said to return around 7%. There are great years where it is double digits, and lower years (or crashes). Usually investing over time, with a long term plan ends up producing the best results. For this reason, in deciding how to save for my kid’s college, I will use 7% as our number.

What savings options do I have for a college education?

I prefer a 529 account, because of the flexibility of the money. Many states have a pre-paid college program. However, if your child wants to go to college outside of your state or at a private school, you might not be able to transfer the money.

Also, in 2030, hopefully your counseling or consulting private practice is going even better, so you’ll have a steady stream of money. By then, hopefully you are debt-free, with no house payment or student loan payments.

How to save on a college education:

  • Your child could take AP classes or dual-enroll in high school.
  • They could attend a community college.
  • Have your student apply for scholarships like it is their job.

College calculating

Let’s just take the $205,000 and say that we as parents will cover $100,000. The rest will be made up from future cash flow, scholarships, AP classes, dual-enrolling, and scholarships. Maybe as a last resort, you or your college student, takes out a loan.

How to save $100,000

Here are a few scenarios that will help us determine how much money we will need. These all use the timeframe of 15 years and 7% interest:

  1. Invest $35,102 today will equal $100,003.73 in 2015. Total invested: $35,102
  2. Invest $10,000 today and add $225.75 per month will equal $100,043.71 in 2015. Total invested: $50,635
  3. Invest $1 today and add $315.50 per month will equal $100,004.45 in 2015. Total invested: $56,791

Giving up $35,102 today to build on the compound interest is great, but do you have $35k sitting around? This puts a huge spotlight on why we need to:

  • Live below our means
  • Pay off debt
  • Increase income to help our families
  • Start talking with our kids now about college

Use this savings calculator to run your own numbers

 

Simple Savings Calculator

Joseph R. Sanok, MA, LLP, LPC, NCC

Joe Sanok Private Practice ConsultantJoe Sanok is an ambitious results expert. He is a private practice business consultant and counselor that helps small businesses and counselors in private practice to increase revenue and have more fun! He helps owners with website design, vision, growth, and using their time to create income through being a private practice consultant.

Joe was frustrated with his lack of business and marketing skills when he left graduate school. He loved helping people through counseling, but felt that often people couldn’t find him. Over the past few years he has grown his skills, income, and ability to lead others, while still maintaining an active private practice in Traverse City, MI.

To link to Joe’s Google+ .

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