Whether your child is a newborn or a junior in high school, it's time to plan how you are going to finance a college education -- or, for some, several college educations.
For many parents college costs will be the largest expenditure of their lives. The sooner you begin to save, the more likely you are to reach your goal. And starting late is no reason for inaction.
In either case, it will be an uphill climb. The cost of tuition has been rising faster than inflation. By the end of the decade the cost of going to college may be double what it is today. If you're looking at a public institution that now costs $30,000, you will need $50,000 by the year 2000, according to one source, and a monthly investment of $300. This is well beyond the reach of most young families.
Don't be dismayed. If you have a need, the colleges do not expect you to foot the entire bill. Even if you can't keep up, the important step is to get a running start, says Arthur Hauptman of Washington, D.C., a consultant on financing education. The fact that you made the effort will be in your favor when it comes time to ask for assistance.
The more you learn and know about financial aid and college costs, the more you tip the odds in your favor. Write to The College Board, 45 Columbus Ave., New York, N.Y. 10023-6992 for a free copy of the pamphlet, Meeting College Costs. Consult The College Cost Book and other reference materials available at your local library or the office of your high school guidance counselor.
There are four sources of financial aid: the federal government, state governments, private organizations and the colleges themselves, The College Board points out. Help comes in the form of grants and scholarships that don't have to be repaid, loans (often at low interest rates) and jobs. When the time comes, the financial aid administrator at the college designs a package of aid from several sources for each student who qualifies.
"Most parents simply ignore the problem, plan to borrow the money later or, at best, open a low-yielding bank savings account," says Brant R. Snavely of Jefferson-Pilot Investor Services, Inc. "For most people, it would be wise to consider other investment alternatives."
What alternatives? One of the most attractive is Series EE Education U.S. Savings Bonds. The interest on these bonds is free of local, state and federal taxes. Another option is mutual funds -- a money market, bond or stock fund. Such funds, particularly if you reinvest your capital gains and interest, easily outpace inflation.
Corporations increasingly are involving themselves in the education process at all levels. Check with your company's personnel department to determine whether your company has programs that will help you.
Discussion has begun in Washington on renewal of the legislation that authorizes the federal financial aid programs students currently rely on. Of the $28 billion in student aid, $19 billion is made up of federal aid programs.
The World Future Society reports that only 15 percent of the jobs of the future will require a college diploma, but "more than half of all jobs will require post-secondary education and training." Balance this against another of its predictions: that the highly educated "gold collar" knowledge worker will emerge as a new corporate "elite." You and your children need to decide what kind of education and how much education are right for you.