Why So Expensive?
Over the past two decades, as competition for college admission has become increasingly fierce, the price of higher education has spiraled out of control. "Annual increases for average tuition and fees have consistently outpaced the rate of inflation, rising at a rate of roughly 6 percent a year," says Margaret Atkins Munro, a tax accountant in Essex Junction, Vermont, who specializes in college costs. As a result, paying full tuition for college has become beyond the reach of most middle-class Americans. In fact, a new survey estimates that parents nationwide will save enough to pay for only 24 percent of the total cost of their children's college education. "So you shouldn't beat yourself up if you won't be able to do for your kids what your parents did for you," Munro says. "It's a whole different ball game today."
But before you give up trying to save, there are a few things to keep in mind: First, those staggering savings requirements mentioned at the beginning are based on the assumption that you'll need to accumulate the full amount for college -- something that many American families aren't able to do and, in fact, may not even have to do. (More on that later.) Second, those sky-high numbers are also based on the prediction that college costs will continue to increase at the same rate as they have in the recent past -- and the reality is they may not. (More on that later too.)