# #14: Paying for College

This is part of a series in which we re-evaluate Money Magazine’s “25 Rules To Grow Rich By”. One “rule” will be re-evaluated each weekday until the series concludes; you can keep tabs on the action at the 25 Rules index.

## How Much College Should I pay for?

Rule #14: Aim to accumulate enough money to pay for a third of your kids’ college costs. You can borrow the rest or cover it from your income.

This rule is utter rubbish. Let’s say that you have a newborn child today. How can one reasonably estimate what the cost of higher education will be in eighteen years? The simple fact of the matter is that you can’t, and thus this rule is nonsensical. We know that the cost of education will grow over the next eighteen years. We just have no idea how much.

There’s also a massive difference between the cost of your local state school and the cost of a top-notch private institution. Which do you think your child will be attending? For my parents, they didn’t believe I would attend college at all. For me, I want my child to attend the best school that he can get into, so I’m saving assuming that he’s going to MIT.

So, I check MIT’s financial aid site and it reports that the cost of undergraduate tuition per year right now is \$33,600. So, in order to pay for four years of tuition at today’s cost, I’d have to cough up \$134,400.

On the other hand, what if I were to send him to the local state school? The cost is about \$6,000 a year for in-state tuition. So, to pay for four years there, I’ll have to save \$24,000. Right now, I’m saving with a target amount between these two boundaries.

What about room and board, living expenses, and the tuition rise between then and now? I’ll deal with those when the time comes, but for right now, I have a tangible and sensible target to work towards, rather than an arbitrary number. So, let’s rewrite that rule.

Rewritten Rule #14: Aim to accumulate enough money to pay for what four years of undergraduate tuition would cost for your child at the institute of your choice on the day he or she was born. The rest can be borrowed or covered when the time comes.