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Private vs. Public College Costs.

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Private vs. Public College Costs.


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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.


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Copyright 1999 John P. Greaney, All rights reserved.

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