84%. That number has to be haunting families.
What is it? The near doubling of cost from 2000 to 2010 in college tuition, room and board, according to the National Center for Education Statistics. That's right; odds are that you went to college for half the price or less than what young adults are facing right now.
Now, take a guess at what probably hasn't increased at that same rate? Family savings.
It used to be that most parents would put a thousand or so dollars away every year for their kid's future, and that would be enough. But with the rising costs of every day items, coupled with a lack of increase in family income, saving 84% more to balance out the increase of college costs seems inconceivable...if it's even on parents' radar to begin with.
America has been faced with recessions, bad job markets and an increase in overall costs of living throughout the first decade of this century. This means that even less of us have the ability to save, let alone save for college. We're out there trying to pay bills, fill our cars with increasingly expensive fuel and feed our families, despite the rising costs of groceries.
What does all this mean for the next generation? More debt.
Sure, students are getting some grants and scholarships, but that only covers about 29% of overall college costs...leaving the rest to be paid via family savings or student loans.
According to Sallie Mae, which polled 1,600 households in August 2012, families are currently attempting to save $38,953 for their child's college, but are only raising half of those funds in time for the first day of classes. That same study says that just five years from now, the average cost of a private four-year college education will be $203,114.
Think about it this way: families are currently planning to save for the equivalent of a brand new three-series BMW, but they're only coming up with the funds for a Hyundai Sonata...when in actuality they should be saving for the equivalent of a nice house in the country. It sounds crazy, but it's very true.
The worst part about our current college savings dilemma is that families aren't aware of the different ways they can save. Many take from personal savings or their own retirement to pay for their children to go to college, completely disregarding government-sponsored, tax-advantaged savings options, such as 529 savings plans.
Watching the overwhelming cost of an education continue to grow along with the cost of living is enough to make any regular person feel overwhelmed and swept under the current of money.
At the end of the day, the average American family just can't keep up with the savings that they need for their children's college education anymore. And it's not entirely their fault.
It's important that families start looking outside the traditional ways of savings for college in order to put their children through school. As the economics of college education change around us, so should we. It's no longer as simple as stashing a little cash away to make it. Financing a college education requires dedication, determination, and strong willpower to trade the daily $4 lattes for a home-brewed cup of Joe. It requires strategic, diligent, and intentional saving.
Take a moment this week while the kids are on summer break to research a few different options that can help you save money for college in a non-traditional way. Starting to save now - as opposed to a year, five years, or 10 years down the road - will make a significant difference in whether you and your child will be burdened by loans or debt free after college.