Newspaper article The Christian Science Monitor

College Costs out of Reach? Savings Plans Provide Help TUITION GOING UP:Certain Investment Options Shield Savings from Taxes

Newspaper article The Christian Science Monitor

College Costs out of Reach? Savings Plans Provide Help TUITION GOING UP:Certain Investment Options Shield Savings from Taxes

Article excerpt

ALTHOUGH college costs aren't rising as fast as they did in the 1980s, for many students today the sheepskin is as far beyond financial reach as the mythical Greek Golden Fleece.

For the 1994-95 academic year, undergraduates will pay, on average, $8,990 to attend a public institution and $18,784 for a private college. The bills include tuition, room and board, fees, supplies, books, transportation, and incidentals, according to the College Board, a nonprofit association in New York.

But the real challenge lies ahead, financial analysts says. College costs are rising twice as fast as inflation. The average cost of tuition and fees at some 2,000 universities jumped 6 percent this year over 1993, according to a College Board survey. Overall, college costs chalked up a 5 percent price hike.

"No one knows what's ahead in terms of college costs, but the past tells us that costs will probably rise well ahead of inflation," says Marcia Seigh, account representative at the College Savings Bank in Princeton, N.J.

If college costs rise annually at the comparatively tame rate of 5 percent, by the time today's toddlers reach their late teens, they will have to plunk down $63,000 for four years at a public university.

An undergraduate degree at a private college would cost $195,000, with elite schools charging far more, the College Board projects.

While disagreeing on what financial instruments to use, financial planners do agree on two basic principles for college savings: Start early and invest regularly.

"When it comes to college savings, the earlier you begin the better: Time is your greatest ally," says Sherwin Esterman, a certified financial planner at IDS Financial Services in Wilmette, Ill. Meeting ever-higher costs

There is no sure-fire way for middle-class Americans to plot how much higher college costs will go. But they have groaned loudly about costs often enough that financial managers have pieced together some creative ways for meeting at least part of the ever-higher costs of higher education.

Some investment vehicles shield college savings completely from taxes. One option allows savers a unique way to put the inflation of college costs to their own advantage.

Among the promising ways to invest to cover future academic bills:

r State-backed bonds for college. Issued by 10 states, these securities are free from federal and state taxes and offer investors the safety of a government bond.

Illinois runs the largest college savings program in the country. It has made eight issues of the college bonds in the past seven years, taking in a total of $1.6 billion from investors, according to Mark Gallagher, a managing director of First Chicago Capital Markets, a senior underwriter for the issues.

During the Oct. 3-6 sale of Illinois College Bonds, demand outpaced supply by 17 percent. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.