Checking Out the Cost of College: Dissecting the Total Bill

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Whether or not you went to college (and regardless of who paid for your education, if you did), the joy of planning and saving for that event for your children, your grandchildren, or even yourself and your spouse has to be tempered somewhat by the uncertainty of the financial costs involved. That uncertainty is the exact amount of the eventual bill because clearly cost is going up, up, up, and never down.

And there's the rub: How can you possibly know how much to save if you can't figure out how much college is going to cost?

In this article, I break down all the costs of education into their component pieces as well as compare different types of education. If you know that your prospective student plans to attend a prestigious medical school at the end of the rainbow, you need to plan accordingly. If, however, your budding student has a fascination with all things dead and tries to embalm the family pet before burial, you may be looking at a funeral services school, which costs much less than medical school. The point is that you need to be realistic about your expectations and about the talents and desires of the prospective student before jumping into your savings program. You want to save enough, but saving far more than you need for college is pointless.

Because tuition is usually the largest cost for college, many people make the mistake of saving only for tuition. But other costs, such as housing, books, and supplies, can account for a large chunk of college expenses — a large enough chunk that you should include those costs in your savings plan.

In this article, I let you know what costs you should start saving for, as well as give you an idea of how large a piece of college pie those costs are.

Although I cover the major costs of college in this section, they aren't the only costs you may encounter when sending your child off to college. Although I don't suggest that you start saving for a beer fund, be prepared to pay for other items, such as parking permits, transportation, health insurance, and a movie ticket or a new pair of jeans.

Tackling Tuition

Tuition refers to probably the largest cost for college: the fees for actual instruction. For the academic year 2002–2003, the tuition costs for a state university reached as high as almost $10,000 for an in-state student and over $21,000 for an out-of state student, and many private four-year universities are charging over $28,000 each year for tuition alone!

If you're planning for a baby about to be born, who won't matriculate until 2021, and if tuition continues to increase at a rate of approximately 5 percent each year (which is what has been happening lately in the private universities), that highest annual tuition fee could increase to a whopping $24,400 for an in-state student at a public university, $58,300 for an out-of-state student at a public university, and $67,385 for a student at a private university — or over $97,600, $233,200 and $270,000, respectively for four years. If your baby thinks that carrying a briefcase is cool or asks for the professional doctor kit by age 2, tack on several extra years for graduate or professional school.