Joseph Pisani of CNBC News reports that the cost to attend a four-year nonprofit private college increased 4.3% for the 2009-2010 academic year, bringing the average annual price to $35,636. Meanwhile, during the last 12 months, the Consumer Price Index (a measure of inflation) actually fell 1.3%.
Shockingly, the cost to attend a public college grew at an even greater rate. Public in-state college costs climbed 5.9%, with the average cost reaching $15,213. Out-of-state students watched their costs rise 6% to $26,741, according to the College Board, a non-profit association of schools, colleges and universities. (All costs include tuition, fees and room and board.)
Interestingly, poor investment performance may be one reason college costs continue to measurably outpace the rate of inflation. Many schools are suffering significant losses in their endowments as a result of the current financial crisis. Some of the largest endowments in the country including places like Harvard, Princeton and even the University of Michigan have experienced declines of over 20 percent during the fiscal year that ended June 30, 2009.
However, Benjamin Franklin's words still hold true: "an investment in education pays the best interest." As a matter of fact, over a lifetime a high school graduate earns an average of $1.2 million, while a college graduate earns $2.1 million (in current dollars). Therefore, it's more important than ever to adequately plan for college tuition expenses. Work with an independent fee-only financial advisor to ensure you are taking the right steps to ensure your investments are ready when your student is.
