As we enter autumn, the leaves start to change and students arrive at college campuses across the country. For parents, as well as for students, the start of the academic year raises the specter of some of the largest costs that a family incurs. Hopefully, families have started to prepare for college costs far ahead of the years of attendance, but the sheer size of the expenses may be pretty daunting even for those who have saved since their children are very young. Continue reading
I recently came across a calculator developed by Morningstar to help families estimate future college costs and to determine whether they are on track with saving to meet the future costs of higher education. Let’s have a look at what this tool can and cannot do and how such a tool may be useful.
The key variables that determine the future cost of a college education are:
(1) How many years remain until your son or daughter starts college
(2) Whether they will attend a public or private college
(3) How long they will remain in college, and
(4) Whether they will actually pay the “sticker price,” or receive financial aid, grants, scholarships (etc., etc.)
The Morningstar calculator assumes that your student will, in fact, be paying the full advertised cost of the average public or private university. This is a fairly large limitation to the utility of the tool all by itself. The average student does not pay the advertised price of attendance. In fact, Continue reading