The cost to attend college continues to rise faster than inflation. For the 2020-21 school year, average tuition and fees at public four-year colleges or universities rose 1.1% to $10,560, according to the College Board report, "Trends in College Pricing 2020".
For private nonprofit four-year colleges and universities, average tuition costs rose 2.1% over the year earlier, to $37,650. If you add the cost of room and board, the average bill at public institutions rose 1.0% to $22,180. For private institutions, the combined bill rose 1.8% to $50,770. (Note: all data are weighted for enrollment statistics.)
The trend of college costs growing faster than overall prices is also a long-term one. Adjusted for inflation, tuition and fee costs at public colleges have grown 278% over the past thirty years, according to the College Board. Tuition and fee increases at private schools have outgrown inflation by 203% over the same period.
With increasing costs like these, saving for a child's college education is a daunting challenge. However, choosing not to attend college has graver consequences. On average, a person between the ages of 25 and 34 with a college degree earned 89% more in 2019 than a high school graduate, according to the Census Bureau.
Several alternatives exist to pay for a college education, whether it is an education for your child, grandchild, or yourself. In addition, the Economic Growth and Tax Relief Reconciliation Act of 2001 expanded college-savings incentives.
The above information is educational and should not be interpreted as financial advice. For advice that is specific to your circumstances, you should consult a financial or tax adviser.
Next, we'll take a look at a former tax benefit that allows you to deduct qualified higher-education expenses.