Take the Fear Out of Paying for College

You can do it -- but you have to start now.

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If you've just recovered from the sticker shock of stroller prices, brace yourself, because you're about to learn the cost of college. In 2020, four years at a public university will cost about $118,000; private tuition will run around $260,000, according to estimates from T. Rowe Price Associates in Baltimore, a mutual fund company that manages three state college savings plans.

But saving a little bit each month starting now could add up to a significant chunk of change by the time your child goes to college. Consider this: $100 invested monthly in a 529 college savings plan could grow to $30,500 in 18 years.

Given the recent state of the stock market, investing may seem even scarier than those future tuition bills. But even with the Dow Jones Industrial average dropping, historically, stocks have still beat money market accounts when it comes to returns. If you look back over the last 20 years, a time frame that includes some of the steepest market declines, "the stock market has still grown on average about 8 percent each year," says Jay Stillman, a certified college planning specialist as Savingforcollege.com. Money markets, meanwhile, have grown just 4 percent. According to Stillman, it's short-sighted to base your concerns on a market's most recent performances. Instead, it's most important to invest over time so you're likely to reap a solid average return.

And even if your child goes to the most expensive school in the country, it's reasonable to assume that if your household income is below $70,000 a year, your child will be eligible for some sort of financial aid, which usually consists of student loans. The key is simply to save as much as you can on a regular basis. And because you can open most of these college savings accounts with as little as $25, don't wait another second to start. As anyone who's forgotten to record milestones in a baby book knows, time flies -- and it only gets harder to catch up.

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