The rising cost of college
Unless he gets a scholarship, Leo could end up with a boatload of student debt. For one thing, the cost of post-secondary education has risen dramatically in recent years. When adjusted for inflation, tuition and fees at private national universities have increased about 41% over the past two decades, according to U.S. News Best Colleges 2025.
The average cost of attending a post-secondary institution in the U.S. is $38,270 per student per year, including books, supplies and living expenses, according to the Education Data Initiative. An in-state student living on campus spends on average $27,146 per academic year, while a student attending a private, nonprofit university living on campus spends $58,628 per academic year.
“Considering student loan interest and loss of income, investing in a bachelor’s degree can ultimately cost in excess of $500,000,” according to the Education Data Initiative.
Leo is five years old, so by the time he’s old enough to go to college, these costs could potentially be much higher (considering the aforementioned 41% increase in tuition and fees over the past 20 years).
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Read MoreScholarships, loans and 529 plans
There are different types of federal student loans available, including direct subsidized and direct unsubsidized loans. Direct subsidized loans are available to undergraduate students who demonstrate financial need. The U.S. Department of Education pays the interest while you’re in school, for six months after you graduate and during any period of deferment.
So, for Leo, that may not be an option. However, direct unsubsidized loans don’t come with a requirement to demonstrate financial need, though you will have to start paying interest immediately — even while you’re attending school (otherwise it’s added to the principal of your loan). Private loans are another option, but they typically come with higher interest rates.
Scholarships typically cover tuition and don’t need to be repaid. They can be awarded for any number of reasons, from academic merit to athletic performance to financial need, though there’s a high level of competition for scholarships, so it’s important to have a Plan B. Plus, scholarships typically don’t cover living expenses, so Leo will still need money for that.
If Tello-Trillo changes her mind, she could consider opening a 529 plan, a tax-advantaged account used to qualifying education costs (each plan differs by state). She could deduct those contributions from her income tax, and when the money is withdrawn to pay for qualifying education costs, that money won’t be taxed.
Even if Leo gets a scholarship, a Maryland529 would allow him to use his 529 plan to pay for room and board, books and course-specific fees.
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