Not saving early for college tuition is everyone’s problem. Here’s why

So, your neighbor’s kid just got accepted to Yale, and is worrying about how to pay for it, and you think it’s not your problem. Think again.

You haven’t been living under a rock, and you know just how much college tuition costs – not to mention dorm fees and other living expenses – have soared in recent years, at a rate that dramatically outpaces inflation. And it’s clearly logical to assume that your neighbor – who, after all, is the person with the college-bound high school student in the household – is aware of that fact, too. So, if Yale appears out of reach financially, presumably that’s due to poor financial planning on their part. It’s a personal problem, not a community one.

Well, yes and no.

It’s true enough that American families aren’t saving enough to cover college costs – and let’s not even talk about retirement, at least for the moment (although I’ll come back to that shortly).

The most recent survey from SLM Corp (aka Sallie Mae, the largest private provider of student loans) and Ipsos Public Affairs found that only 48% of parents whose children are under 18 are setting money aside to pay for the latter’s college expenses at all, down from 51% last year. Of those, the average amount saved is $10,040, a 25% decline from last year.

To put that in context, it’s enough to cover tuition costs at Yale for about half a semester, assuming that he doesn’t get a scholarship or a big financial aid package. And it’s worth noting that most students don’t: the average size of a typical grant/scholarship package is less than $7,000.

Source: Not saving early for college tuition is everyone’s problem. Here’s why

Posted in Global Education News

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