What does the future hold for student loan debt?
In October my niece will turn 8 years old.
In February my nephew will turn 4.
Like most great aunts, I’ve been researching pros and cons of custodial accounts, investment accounts, and 529 college savings plans for them.
In 2028 when my niece is 18, it will cost $31,747 per year to attend a 4-year public (in-state) university. In four years, this will total $134,812 dollars.
In 2033 when my nephew is 18, it will cost $38,625 per year to attend a 4-year public (in-state) university. In four years, this will total $164,019 dollars.
According to Debt.org the cost of tuition at public universities has risen more than 344% since 1980. Tuition at private colleges has increased by 241% since that time.
For comparison, the costs of food and electricity have risen about 150% and gas prices have increased by 200% in the same time period.
On average, 70% of students graduating in 2017 finish college with approximately $38,000 in student loan debt.
What I’ve learned so far is pretty discouraging, but I’ll share it anyway because you probably know more than me, and you might be able to offer a better recommendation.
According to The College Board, a mission-based non-profit that prepares students for college, the average annual cost of a traditional 4-year private university is $42,224. At $42,224 annually, a 4-year degree costs $168,896.
The average annual cost of a traditional 4-year public (in-state) university is $21,447. At $21,447 annually (which doesn’t factor in inflation if you’re starting next year), a 4-year degree costs $85,788.
A 4-year public (out-of-state) school costs $33,973 per year. At $33,973 annually, a 4-year degree here costs $135,892.
A 2-year public university is $15,286 annually. At $15,286 annually, a 2-year degree here costs $30,572.
A 2-year private university is $28,155 each year. At $28,155 annually, a 2-year degree here costs $56,310.
It’s no wonder that the average class of 2017 graduate finishes with $38,000 in debt!
Here’s what’s even more horrifying—The College Board has created a College Cost Calculator that you can access here.
Stop what you’re doing, and look at this!
Based on The College Board’s data, we can use today’s annual college costs to predict the cost of future enrollment.
Let’s use 4% inflation for each of the types of universities we discussed, and let’s assume your loved one successfully graduates in 4 years.
Since my niece is almost 8, and my nephew is 3, let’s check out projected college costs 10 years from now and 15 years from now (when they’ll be 18).
In 2028, if we factor in 4% inflation, it will cost $62,502 per year to attend a 4-year private university = $265,412 for four years.
In 2028, it will cost $31,747 per year to attend a 4-year public (in-state) university = $134,812 for four years.
In 2028, it will cost $50,288 per year to attend a 4-year public (out-of-state) university = $213,548 for four years.
In 2028, it will cost $22,627 per year to attend a 2-year public university = $45,254 for two years.
In 2028, it will cost $41,676 per year to attend a 2-year private university = $83,352 for two years.
My lord!
OMG!
In 2033, if we factor in 4% inflation, it will cost $76,043 per year to attend a 4-year private university = $322,914 for four years.
In 2033, it will cost $38,625 per year to attend a 4-year public (in-state) university = $164,019 for four years.
In 2033, it will cost $61,183 per year to attend a 4-year public (out-of-state) university = $259,813 for four years.
In 2033, it will cost $27,529 per year to attend a 2-year public university = $56,160 for two years.
In 2033, it will cost $50,706 per year to attend a 2-year private university = $103,439 for two years.
What about graduate school?
What about buying a car?
What about buying a house, or having children?
What can you do now to prepare your children for the cost of college?
