Have children and a spare $250 a month lying around? Per kid?
Then you are well poised to start saving for a four-year, in-state public university.
If not, start saving anyway, say experts in college financing.
“Every dollar you save will be a dollar less than you’ll have to borrow,” said Mark Kantrowitz, publisher of Cappex.com, a website dedicated to college savings and admissions. “And every dollar you borrow will cost $2 to pay it back.”
Mr. Kantrowitz, who recently moved from Cranberry to Illinois, recommends that from birth, parents should save $250 per month for an in-state public college, $400 for an out-of-state public college and $500 per month for a private four-year college, per child.
Given that those figures are wildly unrealistic for many families, he recommends saving anything at all, ideally through a monthly contribution that automatically transfers from a bank account. When money frees up — a child graduates from diapers, for example, or a parent gets a raise, he advises using that extra money toward college savings.
As for when parents should start saving, “I tell people, ‘At birth,’” said Young Boozer, chair of the College Savings Plan Network and state treasurer of Alabama. “If you don’t do it at birth, the next best time is today.”
When they save for a longer period of time, parents don’t have to put away as much per month.
They also reap the benefits of interest accumulation and, ideally, a growing stock market.
“My father used to tell me that compound interest was the eighth wonder of the world,” said Mr. Boozer.