How much does it take to save money for your child’s college

The prices for college in the USA are already quite high, but after years the cost of education will increase even more.

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In 2036, the price for four years of study at a private university will be about 303 000 dollars, which is almost 2 times more than 167 000 dollars today, the newspaper writes CNBC.

To get a degree at a state university, in 2036, you have to pay around 184 000 dollars, currently this amount is 101 000 dollars.

These predictions were compiled by the platform. Wealthfront, which, to build its forecasts, uses data from the Department of Education on the current cost of education and information on expected annual inflation.

This is the approximate change in tuition in six well-known colleges over the next 18 years. (The amount includes tuition, accommodation and meals, consumables and other typical expenses during the four years of stay in the institution):

University of California Los Angeles $ 221 000 (2018), $ 394 000 (2036)

University of California Berkeley $ 224 000 (2018), $ 399 000 (2036)

The University of Texas at Austin $ 211 000 (2018), $ 377 000 (2036)

Stanford $ 266 000 (2018), $ 475 000 (2036)

MIT $ 261 000 (2018), $ 466 000 (2036)

Harvard $ 266 000 (2018), $ 474 500 (2036)

What is the 529 plan?

Experts say 529 plans, tax-advantaged investment funds that can be used to cover education expenses, are the best way to save for your child's college education.

Plans are managed at the state level, but you don’t have to open them in the state where you live.

When is the best time to start saving money on this plan?

The sooner you start saving money, the more profit you can get.

If you start saving immediately after the birth of a child, about a third of the amount needed to pay for the college will come as a result of earnings. If you start saving from the moment the child enters high school, then less than 10% of the required amount will be received as a result of earnings, and you will need to save 6 more than once a month to achieve the same goal.

How to choose a plan

Your first step in deciding on an 529 plan is to find out if your state gives you the right to deduct from taxable incomes money invested in this plan.

More than half of the states, as well as the District of Columbia, offer such a deduction. Seven states will deduct this money from taxes, even if the plan was not opened in that state. Among them: Arizona, Arkansas, Kansas, Minnesota, Missouri, Montana and Pennsylvania.

In addition to taxes, you can compare plans for their proposed investment options and fees. Perhaps they offer investments that you already know, then this will make it easier for you to work with the plan.

Many funds offer age-based plans—investments that become less risky as your child's college date approaches.

More information on 529 plans is available on the website. SavingForCollege.com.

Read also on ForumDaily:

What should be able to American in 18 years

5 unpleasant things worth knowing about American colleges

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