The price of a college education is high, and getting higher every year. It doesn't matter whether your child is one, 11 or 15, it's never too early or too late to begin planning for a college education.Educational costs are expected to continue rising. That means the longer the time until your student enters college, the higher the ultimate cost will be. To estimate the cost of attending a public or private college, determine current costs, then estimate the annual increase. College costs have been rising an average of about 6 percent annually in recent years.
How to Begin
Starting early is the single most important step you can take to meet educational costs. Suppose you invest a thousand dollars in a bond fund and earn eight percent interest, or $80, the first year. If you put your interest back into your investment, during the second year you will earn interest on your original investment plus the first year's income. Over time your investment builds at an accelerating rate.
Financial Aid
There are a wide variety of financial aid programs designed to help parents and students meet school expenses. Other financial sources include borrowing the money you need.
If you begin saving now, you'll be one step closer to your financial goals relative to college education. The easiest and most painless way to save is through a payroll deduction plan, where part of your pay is automatically deducted and invested according to your instructions each time you receive your paycheck. You can also set up a plan where a certain amount is withdrawn from your bank account and automatically invested each month.
Which Investments to Choose?
Your time horizon should dictate your choice. The sooner you need to spend your money, the more important it is to minimize risk -- avoid short-term principal fluctuations -- and to choose investments that give you easy access to your money.
Over time, stocks have generally outperformed all other financial investments and have offered the best protection against inflation.
Long-term U.S. government bonds rank next to stocks in historical performance, and both have provided higher returns than money market securities, such as Treasury Bills.
Free Information
A free college planning kit is available by calling 1-800-638-5660. It contains information on recent trends in college costs, opportunities and guidelines for obtaining financial aid, and the tax implications of establishing a college fund in the parent's name, the child's name, or through a minorÕs trust. (NAPSI)
