Parents looking to save for their child’s college education in about 10 years may be in for quite a shock. Thanks to inflation, U.S. tuition could soar to more than $300,000 in 10 years — about twice what it costs today, according to estimates from experts CNBC Pro spoke to. . “If you start when your child is born, or in the first few years of their life, it takes a long time for your money to grow and benefit from compound interest growth, which effectively gives you a profit in addition to your own. It means you can get it,” Laura said. Souter, head of personal finance at AJ Bell, says: “If you’re going to save for 10 or even 18 years, it doesn’t make much sense to put that money in cash. In the long run, your money will have a harder time keeping up with inflation, and you’ll have to save more each year.” “It will take a year to reach the desired pot size in the future,” she added. Here’s the cost breakdown and how to invest, according to these experts: Cost Breakdown According to T. Rowe Price, citing research from the Education Data Initiative, U.S. college tuition inflation averaged 12% annually from 2010 to 2022. Wenting Shen, the firm’s Asia-Pacific multi-asset solutions strategist, said this is far outpacing the pace of increase in the consumer price index. Currently, the average tuition fee for a four-year private college in the United States is $54,670 per year, including room and board, Shen said, citing 2022 data from the College Board. Even assuming a more conservative annual inflation rate of 5%, the estimated total cost of college could reach $383,823, she said. Alan Ebright, vice president and senior investment officer at Check Capital Management, said there are many variables because there is a huge difference in the cost of public and private universities. Citing the 10 campuses in the University of California system as an example, he said most of these schools cost more than $165,000 for a four-year degree (not including room and board). “And that’s now. Not in 10 years,” he said. Ten years from now, college tuition will be $295,000, assuming a baseline of $165,000 and a normalized inflation rate of 3% and tuition inflation of 6%, Ebright said. It is said that there is a possibility. In the UK, the situation appears calm. There is a cap on tuition fees, which universities can charge up to £9,250 (about $11,250) a year, but AJ Bell’s Souter said fees were set to rise each year in line with inflation. He said a three-year course would cost around £33,200 over 10 years, assuming inflation was 2% a year. How to invest T. Rowe Price’s Shen said American parents can participate in tax-advantaged college savings plans called 529 plans, which offer certain benefits. Although similar plans are not available in Asia, “the same structure” could be applied to create similar plans for investors outside the U.S., he said. “Therefore, the investments in your portfolio should change as you get closer to starting college,” Shen said. “If your matriculation year is further down the road, your portfolio should start by increasing your exposure to equities to maximize growth potential, then over time with the goal of reducing volatility as your matriculation year approaches. T. Rowe Price, who has managed college savings plans for U.S. investors since 2001, recommends four broad asset allocations: regional; Global stocks diversified by market capitalization and investment style. “Traditionally, tuition inflation has been higher than the broader economy, so it’s important to maintain some exposure to growth assets,” Shen said. Hold stocks of real assets such as energy, metals, and real estate to protect against periods of rising inflation. Bonds to balance volatility. Short-term Treasury Inflation-Protected Securities. And this is Mr. Shen’s allocation method. To be more specific and specify the time frame, until admission he will invest more than 15 years: 100% in stocks. 10 years to go: 75% stocks, 25% bonds. Upon admission: 20% stocks, 80% bonds. Check Capital’s Ebright added that stocks have historically provided the best option for growth. He recommended buying low-cost index funds and stocks like Berkshire Hathaway to diversify your holdings. “Once your kids don’t need the money for a few more years, you can move some of it into the money market, or, in the example of owning Berkshire Hathaway, sell covered calls,” he said. You can do it too,” he said. AJ Bell’s Suter advised parents of UK residents to put money into a personal savings account, a type of personal savings account that is protected from tax. Other options include investing in emerging markets through funds like the Fidelity Emerging Markets Fund, which can offer higher returns over the long term, Souter said. He noted that the company has outperformed its benchmark, the MSCI Emerging Markets Index, over the past 10 years. Small businesses are also a segment that tends to offer high returns, and one global fund to consider is Abdon Global Small Companies, or the UK-focused Tellworth UK SME Fund, Souter said. Stated. Those who cannot actively manage their portfolios can opt for global index trackers such as the Fidelity World Index, which has annual costs as low as 0.12%, he said. It has gained 193% over the past 10 years.