Brittney Beckhorn, a mom of two in River Forest, Illinois, wondered how other parents were tackling saving for college, so she reached out to a group of moms on Facebook to find out.
“Most parents I know with kids about to start college are finding they did not save enough,” wrote the 38-year-old on the social networking site.
Beckhorn, who has a 2- and 4-year-old, said in an interview that she doesn’t want to be in a position where she has to tell her kids that they can’t go to a particular school or program because of a lack of savings. She is still paying off her student loans from law school, which she says has affected her decisions in life.
“I don’t want my kids saddled with that same burden,” she says.
Trying to tackle the total future cost of college can be an overwhelming and potentially disheartening process. And yet, ignoring the issue is not the answer either.
“That savings paralysis is often what I see with families,” says Mary Nucciarone, director of financial aid at the University of Notre Dame. “They look at this big number and think, ‘Oh my gosh, I’m never going to be able to save it all,’ and therefore don’t do anything.”
Coming up with a savings goal — even if it’s not the full amount — can be the first step in figuring out how to tackle paying for college.
[Discover the pros and cons of college savings plans.]
Estimate Future Costs
Parents may not know exactly what school their children will attend, but it can be helpful to think about what type of school they might go to, says Mark Kantrowitz, publisher and vice president of strategy at Cappex.com, a college comparison website.
Will they likely go to an in-state public university, which typically has the lowest sticker price of four-year colleges? Will they start out at a two-year college, then transfer to a four-year — another way to save costs? Or is it likely they will attend a private college?
Online calculators can help parents determine the estimated future cost of college and come up with a savings goal. For instance, the College Board‘s college calculator allows families to enter the current cost of a specific college or select an average cost based on type: private, public, four-year or two-year. Then, the calculator determines an estimated future cost based on inflation and when the child is expected to enter college.
Average tuition, fees, and room and board for 2016-17 at an in-state public university is $20,090, according to the College Board. For a child born today, that means four years at an in-state public school would cost more than $220,000, assuming an inflation rate of 5 percent a year. For an average private, non profit college — which has a sticker price of $45,370 in 2016-17 — college would cost more than $400,000.
[Avoid these college savings mistakes that can cost you.]
Refine a Goal
Don’t focus on trying to pay for 100 percent of that sticker price, experts say.
“It’s kind of a mind-boggling figure,” Kantrowitz says. “When people pay too much attention to that figure, it stops them cold. They say, ‘why bother?’ My child’s not going to be able to afford to go to college.”
Look at paying for college as a “three-legged stool,” Nucciarone says. The first leg should come from savings, the second from income while the child is in college and the third from long-term financing, such as loans.
Kantrowitz recommends aiming for a goal of saving for one-third of the estimated cost. With that strategy, the savings goal for an in-state, public university would be about $80,000 for a child born today, while the savings goal for a private non profit would be around $150,000.
If that amount still seems unreachable, Nucciarone suggests experimenting with a smaller goal. Even a relatively small amount of savings could cover the cost of books or mean the difference between going to a first – and second – choice school, she says.
[Know when to shift age-based college savings.]
“Can you save 10 percent?” she says. “If, when you get to college, you have $4,000 saved, that’s $4,000 you don’t have to borrow.”
Beckhorn says that she has an Illinois 529 account — which is a college savings account with tax advantages — for both of her children in Illinois. She contributes $150 per month into each. She says she hopes to increase that amount when child care costs go down as her children enter school.
But she says she also needs to balance college savings with other pressing needs — like retirement savings, paying off her own student loans and chipping away at her mortgage — so she’s OK with her kids ultimately having some “skin in the game.”
Trying to save for college? Get tips and more in the U.S. News College Savings 101 center.
More from U.S. News
Index Funds Offer College Savings Options
3 Things to Know Before Cashing Out College Savings
3 Questions to Ask About Age-Based 529 Plan Investments
Estimate, Set a College Savings Goal originally appeared on usnews.com
