Your baby will be attending college in 18 short years or less, so it’s time to start saving.  And if you think college was expensive for you, just wait until you see the costs for your child.  According to the website popularbabyproducts.com, the average cost for college in 2008 was just over $100,000 for all four years.  If your child wants to attend a private college, such as Harvard, the 4-year price tag is closer to $250,000.

Now consider the fact that college costs continue to rise, even right now, despite the recession.  Colleges are losing money and donors just like other businesses, and the difference is made up in tuition payments.  When your child enters college in 18 years, expect to pay $250,000 over 4 years for a public school and $500,000 for a private school.

Start Saving Right Now

Such high numbers can seem a little frightening.  Who has that kind of money?  Should you even bother saving anything?  The answer is yes.  And your first task is to stop worrying—nobody can realistically save up enough money to cover all four years.  (If you do believe you can reach that goal, absolutely go for it; just don’t let the idea cause stress.)  Anything you can afford to save will add up, even if it’s only $50 or $100 per month, and the earlier you start, the more you’ll have in the end.

Different Savings Options

You can opt to stick with a regular savings account, but you won’t yield as much growth as you could with other options.  Especially if you’re starting soon after the birth of your child or in the toddler years, you might consider investing in stocks or mutual funds to get the highest returns on your money.  Of course, doing so is a little riskier since there’s the potential for loss, but the gains over time can outweigh any minor losses you’ll encounter.

At any point before your child enters college, you can also check out a 529 savings account.  You deposit money like normal, but any interest earned is not taxed if it is used for education expenses, and that includes anything—tuition, room and board, textbooks, etc.  You can also try programs like U-Promise (www.upromise.com).  This is a credit card rewards program that helps you save for college by rewarding you for eligible everyday purchases.

Financial Aid and Scholarships

It’s true that the amount you have saved up will affect how much financial aid your child is eligible for.  Financial assistance programs take an “expected family contribution” into consideration, and this is based on your income and your savings.  Don’t let that discourage you from saving—you want your child to leave college with as little debt as possible.  The amount you save will offset the amount your child would need in the way of financial aid.  And don’t forget about scholarships.  Encourage him or her to apply for as many as possible before resorting to student loans.

For those taking classes in online universities, you too can benefit from financial aid. And even if your child enters college next year, it’s never too late to start saving (and teach your child how to save, too).