Parents of young children may already anticipate the weight of paying for college a decade or more in the future. With tuition rates rising every year, families may have to put away far more money to afford college costs 10 or more years from now. But there are ways to anticipate college costs ahead of time and prepare for what's to come.  

Here are 4 ways to anticipate college costs 10 years from today.  

1. Use a Calculator to Estimate Costs  

While nobody knows exactly how much college will cost in a decade, some great online calculators can project the approximate price. Many calculators work by assessing today's price of college against the estimated annual rise in college costs.  

Some estimates peg college tuition costs at growing around 8% per year. That means a college that costs $20,000 a year today could be costing today's 8-year-old over $40,000 per year in ten years. 

2. Figure Out How Much to Save  

There are many aspects to saving for college. Students will need money to cover tuition and fees, books, living expenses, and more. When parents are figuring out how much to save, all of those costs should be factored in. 

Families can use estimated expenses to help figure out how much to save. Once families define a lump-sum savings goal, they can break it down into monthly or weekly savings to make it a bit more digestible.  

3. Choose the Right Savings Vehicle  

Several options are available for families looking to set aside money for college. Some accounts, like a 529 college savings plan or Coverdell education savings account (ESA), offer tax-advantaged savings options. Money saved in those two accounts could be tax-deductible for the saver and tax-free on the student's end if they use the money for qualified education expenses.  

Other financial tools that can supplement a college savings account include savings bonds, taxable brokerage accounts, custodial accounts, and a permanent life insurance policy. Permanent life insurance, such as whole life insurance, has the benefit of building cash value in addition to its guaranteed death benefit. If the main goal for a life insurance policy is to insure a child's education is funded in the event of the death of their guardian, tapping that policy for cash value may be an appealing way to get the most out of life insurance. Each option has pros and cons to consider, and parents who aren't sure which option is best may benefit from consulting with a financial advisor.  

Don't Forget Financial Aid  

Most financial aid is determined by looking at parents' assets. However, the good news for parents considering a whole life insurance policy is that it's not considered an asset as far as financial aid eligibility is concerned. For that reason, whole life insurance doesn't hurt a child's financial aid options. 

The Bottom Line  

The best thing parents can do to safeguard against rising education costs is to anticipate college costs and begin to save now. Taking steps to estimate the cost of college, create a savings plan, choose the right savings vehicle, and consider financial aid can all lead to a greater chance of having enough money saved for college when the time comes. And that means parents and students will be as prepared as possible when it's time for kids to leave the nest.   

Contact: carolina.darbellesv@iquanti.com