Why Save for College?
- Rising Cost of Education
- Education Pays
- Saving Even A Little Can Go A Long Way
- Reduce Reliance on Debt
College is an investment for a lifetime - the gift of a college education can open the door to a world of opportunity for your child or grandchild. Saving, even a little at a time, can make a big difference down the road. With the cost of a college education continuing to increase, the key is to start saving early and regularly.
Rising Cost of Education
According to the College Board, the average cost for tuition and fees at four-year public institutions has increased nearly 51% over the last 10 years (after adjusting for inflation), and these costs will almost certainly continue to rise. Saving for college can help with the increasing cost of a college education and help you be financially prepared when your children are ready for college.
No matter how much you save, even a little can make a difference.
Saving for your child's college education is an investment in their future. The savings you make today pay off in an increased earnings potential in the future. According to the U.S. Census Bureau, college graduates earn an average of $1 million more than high school graduates during their careers. The value of your investment in a college education will continue to grow for a lifetime. It will pay for itself both personally and professionally.
- Among men, median earnings of four-year college graduates were 63 percent higher than median earnings of high school graduates in 2005.
- Among women, median earnings of four-year college graduates were 70 percent higher than median earnings of high school graduates in 2005.
Saving Even A Little Can Go A Long Way
Remember - no matter how much you save, even a little can make a difference.
Like any other major investment, the key to saving for college is to start early and save regularly. By saving a set amount at set times, your money can grow as your child does. And before you know it, you'll be just as ready for college as they are.
Set your college savings goals realistically. You may not be able to save enough for all four years of tuition, room and board, and other expenses - but you could save enough to give your child the right start.
A family that begins setting aside $50 a month when their child is born can accrue over $21,000, in an account that earns 7% interest per year, by the time the child turns 18.
Reduce Reliance on Debt
More and more families rely on student loans to pay for college. Though low-interest loans are often available for college financing, paying even small amounts of interest can add up considerably over long periods of time. By saving for college, families can reduce their reliance on loans, earn interest versus paying interest and help their student leave college debt-free.
To better understand how 529 plans fit within the U.S. Dept. of Education Federal Financial Aid formula read: CSPN Report: Financial Aid Process Favors Saving for College May 2011