College Savings Month on September, 2024: Is $175 a month for a child's 529 college savings plan enough?
September, 2024 is College Savings Month 2024. Gerber Life College Plan Give Your Child A Head Start To College. Start Small & Save Big!
Okay - as I'm sure you can guess, this question can't be answered without knowing how old your son is. If he was born yesterday, you have 18 years to save towards his educational expenses - if he's already 10, you only have 8 years until his college bills begin knocking on your front door.
Let's look at a couple of examples:
It's difficult to accurately predict what it will cost to send a student to college in the future, but we can make certain assumptions, based on historical trends in college cost inflation.
Get ready to be scared - if your child will be starting college in 18 years, the estimated total cost of a 4-year degree program at an in-state public university is approximately $174,000.
If your child were to start that same school just 10 years from now, the estimated cost would drop to $118,000.
You can already see why it matters how long it's going to be until your child heads off for State U.
Let's get back to our example where your son is 18 years from college - now we have to make a prediction about the rate of return on your 529 plan. For the sake of argument, let's predict a fairly reasonable rate of return of 6 percent a year.
If you contribute $376 a month to your 529 plan for 18 years, you're on track for covering that $174,000 cost of education.
On the other hand, if your son is already 8 years old, and will be attending college 10 years from now, you would have to contribute $559 a month, just to make that $118,000 goal to cover the anticipated cost of a college education beginning in 2018.
So there you go - you need to do your own calculations, based on your son's age, and giving a little more thought to where he's going to go to school. If you choose an out-of-state college, just remember that you'll be paying a HUGE out-of-state tuition premium that will completely overwhelm your ability to save. If your son is not a Louisiana resident, the expected cost of an LSU degree in 18 years would be $264,000! Ouch.
I'm linking to a great calculator from Smart Money Magazine that you can use to test your own "what-if" scenarios. I hope this helps. Good luck to you and your son!
Baby College Savings?
My husband and I save up $2500 to start each kids college fund, and then put about $50 a month in each. Obviously there are some months we can do this and some we cant. Worst case scenario we dont have enough when the times comes, then we will help pay back the students loans. Good luck :)
Kids College Savings?
IF you already max out how much to put aside in the form of company retirement matching funds and you have a pretty solid nest egg and own a home, THEN and ONLY THEN should you start to invest in college funds. You can always use funds to get loans and such on retirement funds if you're set up correctly.