“As education costs continue to rise, they are becoming outlandish,” writes Daniel Indiviglio in his Atlantic.com blog. “Although college is a valuable investment, at some point you have to wonder if the price is beginning to exceed the return.”
Indiviglio, who writes about investing and banking for TheAtlantic.com, extracts the following figures from Fidelity.com’s recommendations for parents who want to fund their children’s college educations.
- If your household income is $55,000, you will need to save 3.5% of your gross income ($160/month) if your kid will attend a public college, or 9% ($410/month) for a private one.
- If your household income is $100,000, you will need to save 3% of your gross income ($250/month) if your kid will attend a public college, or 5.5% ($460/month) for a private one.
Those figures are pretty staggering. How many families that earn $55,000 a year, we wonder, will really be able to salt away $410 a month to pay for a kid’s education? (“No food on the table this month, Junior, we’re saving for college.”)
If you have two kids, you have to double those figures, and so on. And you also have to keep saving for a long time – from the moment your kid us born until he or she reaches age 21.
Indiviglio points out that parents have to come up with that money from after-tax dollars – and that parents will have to set aside all that money during the years when they should really be saving for their own retirement years.
“This is simply incredible,” Indiviglio notes. And we agree.
Fidelity, of course, hasn’t created any statistics to show how their figures would be changed if parents planned to slash costs by having their kids take classes at a community college or online college courses at StraighterLine.com Fidelity hasn’t run those numbers – but we invite them to try.
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