College may seem like a long way off, but it's good to start saving now. Even saving a small amount each month can get compound interest working in your favor. Beginning to save earlier rather than later may open up more choices and opportunities for higher education.
Do your homework
A college education today, including tuition, room and board, is estimated to cost an average of $19,000 per year for a public college (in-state) and $43,000 per year for a private college.1
By 2032, the cost per year is projected at $50,000 for a public college (in-state) and $110,000 for a private college.
Compare the costs of public, private, community and in- and out-state schools.
Saving for college over time will cost less than borrowing for college.
Getting a head start on saving for college makes a real difference. The illustration below is an example of two individuals who set aside $300 a month, each earning a 7 percent rate of return. The individual with a 10 year head start has more than 3 times savings after 18 years.
* The illustration is a hypothetical example and performance shown is not indicative of any investment.
Consider investing in tax-advantaged education accounts such as 529 College Savings Plans and Coverdell Education Savings Accounts. Compare the different features of a variety of college saving options.
529 College Savings Plans provide an affordable, convenient way for families to save for college. While tax advantages are one of the primary benefits, there are other features and benefits to 529 plans. Learn more.
Be creative with saving strategies. Have family and friends contribute to college funding in lieu of toys and other gifts.
Be aware of spending habits. That daily latte can add up in the long run. Monitor your expenses with our Budget Worksheet to stay on track.
ABCs of College Planning
Studies suggest that a college education is a good investment. Given the reality of fast-rising tuition costs, it's more important than ever to consider strategies that can help you meet the financial challenges of higher education. Learn more about the ABCs of college planning.
1 The College Board, Annual Survey of Colleges: Trends in Student Aid 2015. Estimate assumes ability to graduate in four years, and a 5 percent annual increase in college costs. Estimate includes tuition, room and board.
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e3uhpy The College Board, Annual Survey of Colleges; Trends in Student Aid 2015. Estimate assumes ability to graduate in 4 years, and a 5% annual increase in college costs. Estimate includes tuition, room and board.
The RealSteps>approach helps parents and students through all the steps of college planning, from starting a savings account, to preparing for college, to getting your graduate off to the right start.
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