Planning for the Future
One of the most important decisions you will make is deciding on a career. Once you decide, it may take many years to prepare for your chosen career. Many times preparing for a career involves earning a college education. Perhaps one of the best reasons to go to a twoyear or fouryear college is that this will give you more career options. There have been many studies about whether college graduates earn more money than their counterparts. While there might be some debate about how much more money a they will earn, there is widespread agreement that college graduates have more options than their contemporaries.
Anyone interested in a career in Science, Technology, Engineering, or mathematics (STEM) will almost certainly need a college degree, and quite possibly even more advanced training like a Master's or PhD. Many other higherpaying careers require a college education, or an associate twoyear degree from a community or junior college. One advantage of going to a junior college is that this will let you try it out, and it provides a convenient stopping point after two years if you decide you don’t want to continue. And if you do decide to continue, then you may transfer to a 4year college and receive credit for your first two years at the junior college. However, there can be problems making this transfer as well, since some of your courses taken at the junior college might not match the requirements of the degree program at the 4year college.
As reported by payscale.com, the top 5 highestpaying annual salaries for bachelor’s degrees for new graduates in 2019 were:
 Petroleum Engineering: $94,500
 Physician Assistant: $91,100
 Electrical Engineering & Computer Science: $88,000
 Pharmacy: $79,600
 Metallurgical Engineering: $78,100
Note that the figures above are industry averages, and your personal annual salary may be lower or higher than the industry average. Also notice that all the careers above require a strong background in mathematics and science.
The table below shows the average annual cost of attending college, from 2018. On average, for a public school, an education at a twoyear college will cost $10,281 and at a fouryear state college will cost $20,050 per year. Your net price reflects the fact that most students obtain scholarships, grants, and financial aid to help pay for college. The net cost is what you and your family need to pay on average, assuming that you can obtain scholarships and other financial aid to cover the rest of the cost.
Public 2year  Public 4year  Private 4year  

Average annual total tuition, fees, room, and board

$10,281

$20,050

$43,139

The figures in the table above are from the National Center for Education Statistics.
Saving for College
It’s not too early to make a savings plan to save the money needed for at least the first year of college. Because the amount of scholarships and financial aid available is unknown, you should plan to save $20,050  an amount necessary to attend the first year of some fouryear public colleges. This assumes that the costs of college will not rise over the next few years, which is probably wishful thinking.
The savings plan will involve you (or your parents) making monthly payments into a savings account. It is hard to find a savings account that pays a high interest rate, but let’s assume that you can find an account that pays an interest rate of 1.11% compounded monthly.
Farther Off in the Future
Just as small amounts of money invested monthly amount to significant savings for college, the same is true of a retirement plan. Investing or paying into an account at regular intervals, establishes an annuity or taxfree savings account.
EXAMPLE 1
How much must be invested each month into a savings account that pays 1.11% interest compounded monthly to have $22,261 after four years? How much to have $22,261 after eight years? After twelve years? What action do your answers suggest?
4 years  8 years  12 years  

Monthly Investment  $453.82  $221.90  $144.64 
As we can see from the table above, the earlier you start saving for college, the lower the monthly investment you will have to make. For example, if your parents started to save up money from the time you were in the first grade, all the way to the time you were in the 12th grade, over those 12 years, they would have to invest $144.64 each month in order to have $22,261 saved up.
Note: There are online calculators to help you find your monthly savings goal. One such calculator is here.
EXAMPLE 2
The Ortiz's are newlyweds and have figured that they need to save $50,000 to make the down payment on their dream house. To do this, they plan to make monthly deposits into an account that pays an interest rate of r = 1% compounded monthly. They can afford to save $600 dollars each month. How long must they wait until they have money they need?
Solution: the Ortiz's will have to save up for 80 months, about 6.75 years, in order to accumulate $50,000.
Note: There are online calculators to solve for the time, such as the one provided here (click on the "Investment Length" tab to use the appropriate calculator).
EXPLORATION 1
Work in groups. Have each group member explore one twoyear college and one public fouryear college. Compare their costs, including the family contribution at each. Discuss in your group how the costs vary from college to college. Is there anything that surprises you?
EXPLORATION 2
Unfortunately, the cost of going to college does not stay the same over time. Due to inflation, the costs increase each year. Suppose that the cost of college increases by 3% per year and that the cost of attending one year of college is $22,261 this year.
 How much will one year of college attendance cost in 4 years?
 How much more will you have to save each month in order to pay for college in four years? How does this compare to Example 1?
 What if you plan to attend college 8 years from now?
To offset the cost of saving, plan to apply for scholarships and financial aid. In this way, your family contribution on average could be reduced.
EXPLORATION 3
Planning for retirement is a complicated issue. There are even retirement specialists who help others make decisions about their retirement. However, there is a lot of useful information available online. Use the internet to explore the following questions.
 How much money do experts suggest you need to save before you retire?
 How much money should you invest each year in order to achieve this goal?
 What is the effect of waiting 10 years before you start saving for retirement? What about waiting 20 years?
 There are many ways to save or invest for retirement. Describe at least three ways. How do they compare to each other?
Exercises

1. Find the tuition and fees of two instate junior colleges. Estimate the total cost of attending each. Find the commuting and residential cost for each.
Sample solution:
The cost of attending Austin Community College is $4,926. The cost of attending Blinn College is $3,872.

2. Find the tuition and fees of one public instate fouryear college, one outofstate public college, and one private fouryear college. Estimate the total cost of attending each. Include travel costs, and assume that you will be living away from home.
Sample Solution:
The costs include tuition and fees, books and supplies, room and board, and other fees:
 Texas State University, instate, total cost of attendance: $21,920
 University of Missouri, outofstate, total cost of attendance: $40,126
 Stanford, private, total cost of attendance: $60,749

3. Investigate three colleges that have programs you might be interested in attending. How much does each cost to attend per year?
Sample Solution:
 Business major at University of Pennsylvania, tuition and fees: $49,536
 Business major at MIT, tuition and fees: $46,704
 Business major at UCBerkeley, outofstate tuition and fees: $38,140

4. Devise a savings plan to make a college education possible. Explain how small amounts of money invested each month could enable a future student to save enough to help pay for college.
Sample Solution:
Start saving up money as early as possible. Get the student involved in saving up for their own college expenses, such as encouraging the student to work a parttime job. The earlier you start saving up for college expenses, the more time you will have to build up the necessary savings amount. Invest periodically and delay unnecessary purchases.