Private vs. Public College Costs.

This article was posted on October 1, 1999.

Here's the calculation. I've chosen two Big East schools with comparable academic reputations that field competitive NCAA basketball teams; Syracuse University and the University of Connecticut (UConn). In-state tuition figures are used for UConn.

Syracuse Univ. Tuition = $19,784 Room and Board = $8,400 Total = $28,184

UConn Tuition = $5,404 Room and Board = $5,694 Total = $11,098

Annual Difference = $17,086

Assume tuition and room & board costs increase 5% per year.

1st year difference = $17,086

2nd year difference = $17,086 x 1.05 = $17,940

3rd year difference = $17,940 x 1.05 = $18,837

4th year difference = $18,837 x 1.05 = $19,779

Calculate value at age 40 for 18 year old student. Use a 10% rate of return.

1st Year - invested for 22 years

$17,086 x (1.10)^22 =

$17,086 x 8.140 = $139,084

2nd Year - invested for 21 years

$17,940 x (1.10)^21 =

$17,940 x 7.400 = $132,760

3rd Year - invested for 20 years

$18,837 x (1.10)^20 =

$18,837 x 6.727 = $126,717

4th Year - invested for 19 years

$19,779 x (1.10)^19 =

$19,779 x 6.116 = $120,968

Total at Age 40 = $139,084 + 132,760 + 126,717 + 120,968 = $519,529

A half million dollar nest egg for a 40-year-old would certainly put that individual well on the way to early retirement.