The following information comes from the website finaid.org. Take some time to visit this site, as
it contains a lot of valuable information about how to save for college and the options that you have
to do so.
According to the Bureau of Labor Statistics, the tuition component of the Consumer Price Index
(CPI) increased by 8% per year, on average, from 1979 to 2001. This means that children born today
will face college costs that are 3 to 4 times current prices by the time they matriculate.
Parents should expect to pay at least half to two-thirds of their children's college costs through
a combination of savings, current income, and loans. Gift aid from the government, the colleges and
universities, and private scholarships accounts for only about a third of total college costs.
Accordingly, it is very important that parents start saving for their children's education as soon
as possible, even as early as the day the child is born. Time is one of your most valuable assets.
The sooner you start saving for college, the more time your money will have to grow.
If you start saving early enough, even a modest weekly or monthly investment can grow to a significant
college fund by the time the child matriculates. For example, saving $50 a month from birth would
yield about $20,000 by the time the child turns 17, assuming a 7% return on investment. Saving $200
a month would yield almost $80,000.
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