The Cost of College: Or, Why Would I Even do the Math?

My wife and I recently welcomed twins—Will and Ella—into the world.  It wasn’t long after that that I completed 529 plan account applications—I’m a financial advisor; what did you expect? It got me thinking about the cost of college today and how that projects out to when my 7-month olds will enter their first year of college.  Is it sustainable?  How might college change?  And could I have avoided the deep depression I’m in by avoiding the math altogether? 

Let’s address each of these questions below. 

According to, the cost of college tuition is increasing at a whopping 8 percent a year (can you invest in colleges?).  And they categorize colleges into three groups: in-state public, out-of-state public, and private.  I ran the numbers using the 8 percent inflation rate, and it’s shocking. 

YEAR In State Public Out of State Public Private 
2020  $                       11,171   $                       26,809   $                       41,411  
2025  $                       16,414   $                       39,391   $                       60,846  
2030  $                       24,117   $                       57,879   $                       89,403  
2035  $                       35,436   $                       85,043   $                     131,363  
2039  $                       48,211   $                     115,700   $                     178,717  
2040  $                       52,068   $                     124,956   $                     193,015  
2041  $                       56,233   $                     134,952   $                     208,456  
2042  $                       60,732   $                     145,748   $                     225,133  

I highlighted the years in which my twins would be going to school.   So my cost would be between $217,243 and a modest $804,321—don’t forget to multiply by two. 

If I wanted to save monthly for the higher threshold, I’d have to save $4,340 per month and earn 6 percent a year for eighteen years—yeah, that’s not happening. 

We have this conversation with our clients with young children all the time.  Often, the outcome is to reassess the importance of covering the total cost of college.  Dedicating this type of cash flow means two things: one, that they are likely putting off their retirement goals; and two, and I’d argue most important, they’re sacrificing their current lifestyle.  This doesn’t mean that you shouldn’t save for college—529 plans can be very efficient at helping to offset college expenses.  But, I think this conversation goes a long way in determining where to draw a line in the sand.   

We recently recommended that a client buy a shore property in North Carolina in lieu of increasing their college savings.  It turns out that their commitment to building lasting memories today was more important than covering the entire cost of college.  And THAT’S OKAY.  After a lot of back and forth, we determined that this was the right thing to do based on their personal beliefs. 

So, is the rising costs of college sustainable.  Yes, for a little while at least–as long as employers and our society put a premium on a college education.  Demand begets supply (and pricing)—it will exist as long as someone is willing to pay for it. 

Though it does bring up an interesting question: how might college change in the future?  What would have to happen for prices to fall without an erosion of the applied premium?  We’ve talked about this in the office for years.  I think the next major shift in college will happen when professors realize they hold a massive amount of power.  Think about a world where top professors form their own direct-to-student curriculum that holds as much weight (if not more) as a four-year liberal arts degree (like mine).  If professors essentially cut out the middle man, this would significantly shift the college or advanced degree landscape.  I believe it’s only a matter of time.  Ultimately, I think this would drive costs down for a whole host of reasons. 

Should any of this shift the way you save for college?  Maybe.  If anything, I hope this puts the goal in perspective.  Perspective is a superpower.  Use that superpower to rank what’s most important to you.  It might be a shore house, or it might be seeing the balance of your children’s 529 plans going up—it’s entirely up to you.  And be prepared to adapt.  Things will inevitably change.  Reassess, and adjust frequently. 

Oh, and should I have done the math?  Sure, why not?  I’ll work my way out of this depression eventually. 

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