While we have very little control over how college administration boards determine what we will be forced to pay every year, we can start planning for the future and build into our plan to inflating costs. A 529 Education Plan allows for investors to save strictly for college in a tax-free shelter. Whatever the account grows to, can be taken out tax-free to pay for higher education. The sooner investors start saving, the better-due to compound interest. Another option is GET Washington. The state of Washington has developed a program which allows its residents to buy college tuition for kids or grandkids now, to lock in the tuition rate, rather than wait nearly twenty years or more to pay. As some one of my graphs depicts, public four year universities will cost almost $130,000 in just ten more years! By buying today’s tuition rate, you avoid the costs of compounding interest working against you.
Those are awesome plans, are they available in other states? Also, what could a family that lives paycheck to paycheck to do? More than likely they wouldn’t be able to save for college.