LaWanda Greer is like most people who attended college during the Reagan era. As a student at San Jose University, she discovered that financial aid was scarce and managed to pay her tuition by finding part-time work. The 30-year-old mother of two remembers the grueling days of rushing from classes to her job and cramming for exams in the wee hours of the night.
It’s legacy that she doesn’t want to pass down to her six-year-old son, Martin II, or her two-year-old daughter, Chantell. “My parents, especially my father, have always believed in higher education, but they just couldn’t afford to send my sister and me to college as times got hard. So, I had to take on that load myself,” she says. “I don’t want my children to have to get jobs in order to pay for college.”
It’s an ambitious goal for the Oakland, California native. When it’s time for her children to attend institutions of higher education, state-supported schools will cost roughly $ 30,000 per year — a whopping $ 120,000 bill for four years — while private universities will be at least $ 45,000 per year, or a total of $ 180,000, for a graduate to leave school with a sheepskin.
In order for Greer, who grosses $ 32,000 a year as an administrative assistant for Technology Credit Union in San Jose California, to pay for her children to become members of the graduating classes of 2011 and 2015, she will need to sock away at least $ 200 a month (for each child) to accumulate $ 120,000 at 12%. That figure factors in an annual growth rate for her current investments at 12% and an annual inflation rate of 5% for increased college costs. She also has to include books, room and board and incidentals, in her calculations.
Greer faces a major financial hurdle, though. She’s divorcing her husband, which means that she will handle the arduous transition of going from a two-income household to a single paycheck. Since her separation, Greer’s monthly expenses have increased from $ 1,350 to $ 2,500 — $ 1,150 in child-care expenses alone. (She has not yet factored in alimony or child support payments.) “My husband is in the military. We lived on the military base and many of our expenses were taken care of by the service,” Greer explains. “Now, I have to maintain the mortgage on a four-bedroom home and pay for my son’s private school education. [It seems that] I will be paying tuition all my life.”
Even before her marriage unraveled, Greer did not neglect building up a college fund. In fact, she started saving by the time Martin II was nine months old. Ironically, it was her father who got the ball rolling by giving his grandson $ 500 to open up a California Unified Monetary Trust (CUTMA). By practicing dollar-cost averaging — investing a set amount of money in a vehicle on a regular basis — Greer also invests $ 25 each month regardless of market conditions. Her money is automatically withdrawn from her bank account and deposited into the Oppenheimer Main Street Growth