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Or you could buy a house;
Though estimates vary, two things are clear; Higher education isn't cheap
and it isn't about to get any cheaper
--Maggie McGehee, Lewiston Morning Tribune
A child born this year can expect to pay for four years of college what
most people today spend on a new house.
That's the conclusion from college officials and an investment specialist
looking at current costs and projecting forward to 2020.
Every year, higher education institutions must report the overall cost of
attendance to the federal government.
This figure includes fees, an estimated cost of books, housing, food and
transportation.
This year, Lewis-Clark State College's overall cost is $10,618 for Idaho
residents.
The University of Idaho costs $11,150 and Washington State University
$13,819, according to the financial aid departments at the universities.
Both figures are for undergraduate residents of the states.
To run those costs forward 20 years, average yearly increases could be used.
Going back to 1978, LCSC's student fees have annually increased an average
of 6.98 percent, UI's 5.81 percent and WSU's 12.14 percent.
So, using the overall cost of attendance for each school, and assuming each
school's average annual increase remains the same, and factoring in a fifth
year of college because that's the average at all three schools now, here's
what a college degree will cost at each school 18 years from now (drum roll,
please) ...
LCSC -- $137,715.
UI -- $128,091.
WSU -- $280,401.
Notice that LCSC's costs overtook UI's, because of the higher average
increase.
Shocking? Even the college officials who provided the figures were
surprised.
At those prices, a parent would need to put aside $638 every month to pay
for LCSC in 2020, not factoring in interest rates.
For the UI, the amount is $593 a month, with WSU coming in at $1,298 a
month.
However, these costs are simply estimates based on assumptions. Change some
of the assumptions and the costs readjust.
Wayland Winstead, UI executive director of institutional planning and
budget, won't speculate on his school's 2020 costs.
"I don't know how you would get that figure," he says. "I am not going to
get the University of Idaho predicting what it may cost in the future.
"Higher education is still a great investment. Of the studies I have seen,
while the price has gone up, the return on your investment for higher
education is still very good.
"As long as that return remains as positive as it is, then I don't see that
we're pricing middle income families out of higher education."
Laura Hughes, LCSC's financial aid director, came up with her own estimates
and was taken aback by the results.
"Assuming there are across-the-board increases of 10 percent each year,
which I think is a safe assumption --we are going up more than that this
year -- the total cost of attending LCSC for four years would be $283,838,
including books, fees, transportation, etc.
"Of that amount, books and fees come to $92,889, which is 32.7 percent of
the total cost of attendance, similar to what it is now.
"It's amazing. I hope the income levels increase close to 10 percent each
year.
"It's staggering the way things have risen. I'm hoping it won't be that
much. Even if a student lives at home, you are looking at $100,000.
"Holy cow, that's a big number."
However, Larry J. Kopczynski, an investment representative for Edward Jones
in Lewiston, came up with his own predictions that aren't quite as shocking.
"I have software on my laptop that allows you to plug in all these
hypotheticals and has all the up-to-date information," he says.
"There's going to be some assumptions here that I have to make."
His assumptions of college costs are a little different, for example, as
well as his annual increase.
"Right now, it costs $8,990 a year to attend LCSC," he says. "The cost that
I have includes room and board, books and tuition.
"You can select any annual increase you want, but I like to use 5 percent."
So, using Kopczynski's numbers, by the time a child is 18, parents will need
only $93,252 to go to LCSC for four years.
That amount can be saved by investing $200.70 a month into bonds with 8
percent annual interest rates, Kopczynski says.
At 3 percent annual increases, Kopczynski figures LCSC will cost about
$63,030 for four years starting in 2020, needing monthly deposits of $137.80
per month.
"You can see how the assumption makes a huge difference," Kopczynski says.
"I find that if you save $100 to $200 a month for newborns, you'll be just
fine."
Kopczynski's current annual cost for the UI is $10,564 per year.
"At a 5 percent increase each year, it will cost $109,579 for four years
starting in 2020."
To save that much, parents would need to deposit $235.83 per month from the
day the child is born into a fund earning 8 percent annually.
At 3 percent, that figure is $75,240 for four years, or $161.93 per month.
At WSU, Kopczynski's annual cost to attend is $12,598.
At 5 percent annual increases, the cost of WSU for four years in 2020 is
$130,677, requiring savings of $281.24 per month.
At 3 percent, those figures drop to $89,727, and $193.10 per month.
"You've got to take it with a grain of salt," Kopczynski adds. "If a kid
doesn't want to work and you want to pay for all of their school, those
numbers are pretty accurate."
------
McGehee may be contacted at mmcgehee@lmtribune.com
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