An interesting article covering the nuances of saving for college, mostly focusing on college inflation rates and anticipated rates of return for your college savings accounts. The long-story-short is that general rules of thumb still apply, even in this fluid branch of investing/saving. The article highlights studies that seem to suggest private versus public university rates of inflation can (and do) vary over time and that common historical rates of stock market returns will be lower over the next decades. Nevertheless, the following general maxims are good starting points for your college savings needs:

• Assume college costs will increase by 6% a year (e.g., roughly CPI inflation rate + 3%)

• Assume your rates of return will average 5% (e.g., due to possible subdued future market returns and scaling of your college savings account to reduce equity exposure)

Both of these rules err on the side of being conservative, but it helps to emphasize that one cannot seemingly save too much for their children’s college costs. The article aptly notes that a $20,000 public university in 2018 will cost more than $57,000 in eighteen (18) years at a 6% rate of inflation. That’s close to a quarter-million after four (4) years of undergraduate study. That’s why at Intelligent Investing, Inc., we teach investing early and often. Click on the title above to learn more about saving for college!