This morning we have a “viewer” question about 529 College Savings Plans…are they the best way to save for college? Let’s ask our Money Man, Certified Financial Planner Paul Fain.
PAUL, WE KNOW THAT COLLEGE IS EXPENSIVE, REALLY EXPENSIVE, WHAT IS THE CURRENT PRICE TAG FOR A 4-YEAR DEGREE?
The College Board’s average cost of attendance (tuition, fees, room and board) was 2017-2018 as follows:
- Public 4-Year College (In-State): $20,770 per year
- Private 4-Year College: $46,950 per year
SO, HOW MUCH SHOULD YOU SAVE FOR COLLEGE FOR A CHILD BORN THIS YEAR?
- For a child born this year, to accumulate 1/3 of the projected cost, parents should save from birth to college enrollment:
- $120 per month for an in-state public 4-year college,
- $250 per month for a private 4-year college.
On average, families only save about 10% of college costs by the time the child turns age 18.
ARE 529 COLLEGE SAVINGS PLANS THE BEST WAY TO SAVE FOR COLLEGE?
- Commit the funds to college.
- Money grows tax-deferred.
- Withdrawals tax-free.
- Age-Based vs. Custom investment funds.
- Best for young children.
- Save as low as $25 per month.
YOU CAN INVEST IN ANY STATE’S 529 PLAN RIGHT?
- Correct. Another state may offer a plan that performs better and has lower fees. Do your homework athttps://www.tnstars.com/www.savingforcollege.com:
- Investment options
It’s never too late (or too early) to start saving for college.
FAST MARKET FACT: The Future Cost of College and a Strategy!
Tuition Inflation: 2036
Public 4-Year College (In-State): $167,622
Private 4-Year College: $312,456
“1/3, 1/3, 1/3”