When personal finance site NerdWallet surveyed 1,200 expectant parents and parents of teenagers, it found that pretty much everyone is worried about saving for college.
They have good reason.
NerdWallet used data from the College Board to create this chart, which concludes that average college costs for the class of 2037 will be nearly $US262,000 at a four-year private school, and exceed $US133,000 at a four-year public school:
NerdWallet used the College Board’s 2014-2015 numbers for tuition plus room and board at a private four-year school ($US42,419/year) and a public four-year school ($US18,943/year) and took into account a yearly percentage increase of 2.14% for private schools and 2.80% for public, based on the compound annual growth rate of college costs over the past 10 years.
According to their calculations — assuming money is saved in a 529 account and using a 7% annual growth rate — this means parents who want to cover their child’s entire education at a private college need to start saving $US3,927.43/year starting on their child’s first birthday.
NerdWallet does point out that not every student will have to pay the exact costs projected, both because of variations in pricing by college and because of available scholarships and aid. However, parents may want to keep in mind that for the 2013-2014 school year, the College Board says the average amount of aid per student was about $US14,000 a year.