every so often, i'll wake up in a cold sweat and bother my wife with the trouble of the escalating costs of college. i'll ask her: 'what if our kids want to go to harvard?' or 'how will we ever afford to send our kids to school?'.
when i went to college -- a state school -- it was really cheap. i remember it being less than $1,000 a semester. i had a scholarship that paid up to $1,000 a semester and i always got a little spending money back after registering for classes. but even state schools are expensive today . . . my school would likely cost me 2-3 times that much today. when you add in room and board, things can get pretty expensive pretty fast. now, i had a job throughout college and managed to get out of school with no debt. i'm not sure that i could do it today with the numbers i hear being thrown around about cost of school.
well, fortunately for me, i have time on my side. no kids yet . . . so, even if somehow a newborn were dropped on my doorstep today, i'd have about 23 years to stash some cash away (that's 18 years up to the 1st year of college and 5 years after that). and to me, that's the only way to do it. if it cost $25,000 a year, that's $125,000 per child for a college experience. sounds like a lot, huh? well, that's only somewhere around $5,000 per year every year if you start saving the day your child is born through his last year of college. that's if it's just sitting there without any interest. if you can make 5% on that annually, it turns out that you can just stash away $3,000 a year, which seems pretty doable -- that's just 250 bucks a month. of course, if you can jump it up to the 10% historical return on the stock market, you could put away half of that annually -- a very reasonable $1,500.
now, i've exagerated the numbers a little bit, but i'd rather wrong on the high side in this case. i mean, if it turns out that my kid can finance some schooling with a scholarship or if it doesn't quite cost as much as i'm expecting, hey, that's a nice little fund to start off with coming out of school.