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The thought of saving for college crosses almost every parent’s mind, sometimes even before their child is born. Yet, for various reasons, a college savings fund often does not become a reality until many years later, if ever. Whether or not you start saving for your child’s education early on, the cost of that college education will continue to increase and, most likely, more than double from the time a child takes her first step to the day she starts freshman year.

Few would dispute the value of a college education. Aside from the personal and intellectual growth, the financial reward is undeniable. In the U.S., four-year college degree graduates earn on average 62 percent more than those with only a high school diploma. Those with a master’s degree earn almost twice as much, and those with professional degrees, over three times as much as high school graduates. According to The College Board’s 2007 report, “Education Pays,” over a lifetime, the gap in earnings between those with a high school diploma and those with an undergraduate degree or higher exceeds $1 million.

Still, the price of a degree could jolt almost anyone’s budget. During the five-year period ending in 2007, the nation’s average public and private college costs rose by 31 percent and 41 percent, respectively, according to The College Board’s “2007 Trends in College Pricing” report.

The same report notes that when on-campus housing, books, supplies, transportation and other personal costs are factored in, the average cost to attend a public four-year university or college for one year is $17,336—and $35,374 at a private institution.

If that isn’t enough to make you want to start saving today, consider this: students are taking an average of more than six years in public four-year colleges and more than five years in private four-year colleges to earn a bachelor’s degree. If these trends continue, most parents who plan to help fund their children’s education can’t afford to put off saving for it.
 
Reducing Sticker Shock
To help you determine how much money you will need to pay for an education once your child reaches college age, there are a number of online calculators such as those found at finaid.org or collegeboard.com. Unless your children are elementary school age or younger, involve them in the process to determine if your child:

It is never too early to begin saving for college. A great place to start includes any of the most popular plans used today, such as Section 529 plans, Coverdell Education Savings Accounts (ESA), custodial accounts and life insurance. In addition to the possible benefits of compounding, these plans may also provide some great tax advantages.
   
Better Late Than Never
No matter how late in the education savings game you get started, if, after factoring in the amount you have already saved, you still fall short, various options may be available, including:

Above all, don’t be afraid to ask for advice when planning for your child’s education, regardless of how late you might be starting this process. Financially, emotionally, and psychologically, it is probably one of the biggest investments you will ever make. And, the impact on your child’s future will last a lifetime. iBi

Article prepared by Northwestern Mutual with the cooperation of Josh Waite, a Wealth Financial Advisor with Northwestern Mutual Financial Network the marketing name for the sales and distribution arm of The Northwestern Mutual Life Insurance Company (Northwestern Mutual)(NM), Milwaukee, Wisconsin, its affiliates and subsidiaries. Financial Representative is an insurance agent of NM based in Peoria, IL. To contact Josh, please call 309-693-0800, e-mail him at [email protected] or visit nmfn.com/joshwaite.

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