(NewsUSA)
– How much will I need for my kid’s college education? And how the heck will I pay for it?With the cost of a four-year degree rising nearly eight times faster than wages since the 1980s, those two questions are enough to give today’s parents a serious case of night sweats. You can argue about the reasons for the disconnect -Administrative costs? Fancy amenities? – but you know there’s a problem when a writer at Education Week is incensed."Madness," she decried.Which is all the more reason to mark May 29 down on your calendar.Otherwise known as National 529 College Savings Plan Day -Get it? 5/29? – it’s the perfect time to consider setting up one those tax-advantaged 529 plans, as they’re called, to help sock money away to cover tuition, books and other education-related expenses at most accredited two – and four-year colleges, universities and vocational-technical schools."It’s a way of keeping your son or daughter from being saddled with too much debt when it’s time to jump start their careers," explained Melissa Ridolfi, vice president of retirement and college products at Fidelity Investments. "Plus, any investment earnings compound on a tax-deferred basis, and qualified withdrawals are entirely free from federal and state income taxes."And now to the big question: How much?Two factors are mainly at play:* Public vs. private schools. The cost difference can be about as mind-boggling as "Avengers: Endgame’s" record $ 357.1 million opening weekend domestic haul: an average of $ 21,370 a year at the former, according to the College Board’s latest figures, as opposed to $ 48,510 at the latter.* The percentage of the bill you plan to foot. If you were counting on scholarships and other grants to pick up all or most of the tab, you should probably rethink that unless your kid is either a bona fide child prodigy or football star. Sallie Mae’s "How America Pays for College" 2018 report found that both categories combined paid for just 28 percent of college costs.One guess where 47 percent of the costs came from. That’s right, "family income and savings," with another 24 percent covered by borrowing.In other words, as Ridolfi said, "any way you look at it, the family is on the hook to pay the lion’s share of college expenses." Which probably helps explain why a recent Fidelity study found that parents are increasingly starting to save before their child even reaches the age of two.To see where you stand, try using what Fidelity calls "the college savings 2K rule of thumb." Simply multiply your child’s current age by $ 2,000 to figure whether your savings to date are generally on track to handle approximately 50 percent of the College Board’s $ 21,370-a-year average cost of attending a four-year public college.Or, especially if you want a more customized estimate – one that lets you play around with percentages and switch back and forth between public and private schools – the firm’s free online college savings calculator takes the angst out of doing the math yourself.Fidelity provides 12 savings ideas to help reach your own goal, and offers a choice of two different investment strategies in the 529 savings plans it manages – including an age-based portfolio of funds that automatically becomes more conservative as the beneficiary nears college age.Hopefully, armed with all that info, you’ll be sleeping better at night.
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