Your 16-year-old bundle of joy is all set for college, right? She's done well in school and should have no problem getting into a good university. And you've done well saving and investing for her tuition . right?
Unfortunately, that's not the scenario for many parents. Feeling financially unprepared for college is a big source of stress for many people. After all, according to the folks at collegeboard.com, tuition at a four-year private college averages $21,235 (up 5.9% compared to last year). At public schools, it's around $5,500 (up 7.1%).
On the bright side, College Board also notes that:
- "About 60% of students attending public four-year colleges pay less than $6,000 for tuition and fees per year."
- "Only about 2% of all students attend colleges where tuition and fees total $33,000 or higher per year."
- "A record $129 billion in financial aid is available to students and their families."
Many other parents (and students) might not be stressing out about it all -- but they should be! Consider some findings from the folks at AllianceBernstein:
- "Record numbers of young adults are graduating from college with crushing levels of debt that will weigh them down for most of their adult lives." (If you or your loved ones are grappling with credit card debt, we'd like to help. Visit our Credit Center, for starters.)
- "87% of parents believe scholarships and/or grants will cover a portion of their children's undergraduate education expenses" and "72% think their children are likely to have 'special or unique' talents deserving of scholarships." But "92% of financial aid administrators say parents overestimate the amount of scholarship money their children will receive."
- Here's a troubling statistic: "49% of parents spent more on vacation last year than they saved for their children's college costs; 38% spent more on consumer electronics." I suspect that even many of those who did save and invest significantly for college didn't do so as effectively as they should have. They may have been too conservative, or perhaps too aggressive. If you're chasing the 25% average annual gains that Best Buy
(NYSE:BBY)racked up over the past 20 years, or Intel's (NASDAQ:INTC)22% average gains, be careful. Past performance doesn't always dictate future gains.
Don't let yourself be too optimistic or pessimistic about college. If you have reasonable expectations and plan well, Junior should be just fine.
You'll find lots of additional tips on paying for college in our College Savings Center. Our Paying for College discussion board is a good place to ask questions you may have, and our book, The Motley Fool's Guide to Paying for School by Robert Brokamp, is also a handy resource.
Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article and recently had a CAPS ranking of 570 out of 11,976. The Motley Fool has a full disclosure policy.