Here’s Exactly How Much College Might Cost You In the Future
One third of parents don’t know how much higher education will cost, a new survey finds. They might be in for a rude awakening, as colleges are increasingly facing budget cuts right now.
When it comes to knowing the price of college, many parents get an F.
Roughly one third of parents aren’t sure what college will cost by the time their children enroll, according to a new survey from Fidelity. Unfortunately, they might be in for a massive sticker shock. For decades, annual college tuition and fees have risen faster than inflation, and very recently have been rising at a rate of 3% to 4% per year. (Though this year, amid the pandemic, tuition and fees actually fell.)
But experts say you shouldn’t expect tuition and fees to keep falling. In fact, just the opposite: “Long term you can expect college costs to go up at least 3% to 4% a year,” says Mark Kantrowitz, the publisher and vice president of research at Savingforcollege.com. And Andrew Pentis, a senior writer at Student Loan Hero, notes that the “safe assumption” for what college will cost in the future is that it will rise roughly 3% a year.
College experts say that there’s been a recent trend in families successfully negotiating to pay less for college.
When you put pen to paper, that’s going to mean a significant price tag for college. In the 2019-2020 school year, average annual tuition and fees at a public, in-state, four-year school were $10,440, and at a private, four-year school were $36,880, according to The College Board. If you have a baby now, who will go to college in 17 years, you should expect to see a sticker price of upwards of $20,000 per year for that in-state school and upwards of $71,000 per year for that private school (assuming a 4% college inflation rate)—and that doesn’t include room and board. That means that over a four-year period, the tuition and fees sticker price could total more than $80,000 and $284,000 respectively. (This handy calculator can help you figure out what college might cost based on the age of your child.)
And if your children are older, the news may not be great either. “The tuition at state colleges may have to go up by double digit rates [in the coming year or so],” says Kantrowitz. That’s because state schools are supported by funding from the state; amid the pandemic, some states are struggling and cutting funding to colleges. For example, state universities in New York are preparing for big cuts, and pondering whether they may up tuition, though they haven’t decided yet, The Wall Street Journal reported.
Of course, the sticker price of college, and what you actually pay out of pocket for college, are two different things. “Net price is what people need to look at,” explains Kantrowitz, as that subtracts out scholarships and grants and rises a little more slowly than the sticker price of college. And it’s possible legislation could be passed to make college more affordable, or that solid and affordable alternatives to college become more prevalent.
Still, many experts agree that you’ll probably be paying more for college in the future. That’s why Kantrowitz, who has been studying college tuition and funding for decades, says: “I started saving for my kids' college education before they were born.” But don’t worry, if you haven’t done that yet, open a 529 plan and invest at regular intervals, experts say. “Every dollar you save is a dollar less you'll have to borrow,” says Kantrowitz.