529 Plans: The Antidote to College Sticker Shock

CASH FOR COLLEGE: SAVING THE WAY FOR YOUR CHILD'S EDUCATION Young parents, right now you may think your darling little Max's ability to fling his breakfast waffle clear across the kitchen means he's destined to get an full-ride to Dartmouth on an ultimate frisbee scholarship, and that Stanford will be banging on your door with tuition incentives to lure your little Isabella just because she was the first member of her nursery school class to ditch dia pers. The reality is, your precious little snowflake will probably need to pay for college. Here's how to get started on the path to savings. What is a 529 Plan? A 529 college savings plan is a tax-advantaged, state-sponsored account designed to help you save for higher education expenses. Any earnings in the plans are not subject to federal tax or, in most cases, state tax, if used for qualified educational expenses. You can start a 529 plan regardless of your income level, and anyone – including relatives and friends – may contribute to it, up to a limit established by each plan (ranging from $235,000 to $380,000). If one child doesn't need the money for any reason, you can switch the plan to benefit another member of the beneficiary's family. 529 Plan Top Performing 529 Accounts Percentile Ranking Figures based on 2011 Q1 data When selecting a 529 plan, check first to see if there are any incentives to investing in your own state's plan, such as tax benefits. Don't forget to check the expenses on your state's plan as well. If you don't like your home state options, you are free to invest in any other state's plan. Here's a look at some of the best performing plans over different time periods, according to a study by savingforcollege.com One-year Performance Ranking 22.06 CollegeAccess529 31.76 North Carslts National College Savings Program SD T.RowePrice SAVING S PLAN 28.03 LOSFA THE UNIVERSITY OF 37.78 ALASKA COLLEGE SAVINGS PLAN LA 28.13 START AK Three-year Performance Ranking 5.55 USAA 529 College Savings Plan EDVEST 29.94 WI 23.88 charles SCHWAB 529 College Savings Plan NV KS COLLEGE SAVINGS PLANS OF MARYLAND THE UNIVERS ITY OF College Investment Plan 32.52 ALASKA COLLEGE SAVINGS PLAN AK 31.41 Five-year Performance Ranking 19.51 USAA 32.09 529 College Savings Plan mejsp Mr 30.73 charles SCHWAB Michigan Education Savings Pregram 529 College Savings Plan NV KS MD COLLEGE SAVINGS PLAN S OF MARYLAND College Investment Plan THE UNIVERSITY OF ALASKA COLLEGE SAVINGS PLAN 34.11 AK 34.60 Common College Saving Myths How will saving for the cost of your children's college using a 529 plan, for instance-affect your ability to get fiñancial aid? Parents are often concerned that they will forgo free money for their children's education by holding too many assets in a college fund. This concern is a result of two myths people have about financial aid: Myth Myth Financial aid will be free money Any savings will reduce my aid dollar-for-dollar A common misconception is that, “If I save $5,000, my aid will be reduced by $5,000 – and I don't want to miss out on this money." In reality, the majority of federal financial aid offered is in the form of loans. Most federal aid consists of Stafford loans, PLUS loans, and other borrowed money. Additional loans are available privately, but they are still debt that you and your child take on. And all loans are money that will need to be paid back. The Truth Most of the aid likely will be in the form of one or more loans, which means your choice is to save now or borrow later. The Truth Your savings has a minimal effect on the federal aid you would be offered. Federal aid is based primarily on your child's income and assets, and your income. At most, only 5.6 percent of your non-retirement assets is expected to be used for college expenses each year: If you have $5,000 saved, the aid amount you'd be offered would be reduced by only $280. And the $5,000 saved is money you won't have to borrow and pay interest on later. So start investing for college early and contribute often – and don't let the myths about financial aid concern you. Saving helps you avoid debt you probably would prefer not to have, and the value of your assets only reduces financial aid offered by a minimal amount. Quite simply, you are more financially prepared to cover college costs with savings than without. How Much Do You Need To Save Each Month? How much you must save for your child will of course depend on when your child will be attending college, and what type of university they will attend. Current National Average of College Costs $36,993 per year $16,140 per year Public University Private University The Following Scenarios Assume: 80% 6% $0 success rate (The percentage of certainty that your investment goal will be met. If you want to be 100 percent sure that your investment will succeed, you will most likely need to contribute more money). 4 YEARS No initial contribution An estimated 6 percent annual inflation rate for college costs of attendance Bobby Jenny Susie • Age: Newborn •Year expected to attend college: 2029 • Age: Five (kindergarten) •Year expected to attend college: 2024 •Age: 14 (high school freshman) •Year expected to attend college: 2015 Total Cost: $202,712 Total Cost: $151,478 Total Cost: $89,659 Portfolio 2029* Portfolio 2024* Portfolio 2015* Amount To Save Monthly: $653 Amount To Save Monthly: $768.27 Amount To Save Monthly: $1,824 Total Cost: $464,617 Total Cost: $347,189 Total Cost: $205,500 Portfolio 2029* Portfolio 2024* Portfolio 2015* Amount To Save Monthly: $1,497 Amount To Save Monthly: $1,760.88 Amount To Save Monthly: $4,188 *All three scenarios assume savings is held in an enrollment-based portfolio that is managed according to the date when the child will be starting college. Your dedication to saving for your child's education has paid off! Time to send them to campus. But don't worry, they'll be back. SOURCE: T. ROWE PRICE I SAVINGFORCOLLEGE.COM. mint. com CASH FOR COLLEGE: SAVING THE WAY FOR YOUR CHILD'S EDUCATION Young parents, right now you may think your darling little Max's ability to fling his breakfast waffle clear across the kitchen means he's destined to get an full-ride to Dartmouth on an ultimate frisbee scholarship, and that Stanford will be banging on your door with tuition incentives to lure your little Isabella just because she was the first member of her nursery school class to ditch dia pers. The reality is, your precious little snowflake will probably need to pay for college. Here's how to get started on the path to savings. What is a 529 Plan? A 529 college savings plan is a tax-advantaged, state-sponsored account designed to help you save for higher education expenses. Any earnings in the plans are not subject to federal tax or, in most cases, state tax, if used for qualified educational expenses. You can start a 529 plan regardless of your income level, and anyone – including relatives and friends – may contribute to it, up to a limit established by each plan (ranging from $235,000 to $380,000). If one child doesn't need the money for any reason, you can switch the plan to benefit another member of the beneficiary's family. 529 Plan Top Performing 529 Accounts Percentile Ranking Figures based on 2011 Q1 data When selecting a 529 plan, check first to see if there are any incentives to investing in your own state's plan, such as tax benefits. Don't forget to check the expenses on your state's plan as well. If you don't like your home state options, you are free to invest in any other state's plan. Here's a look at some of the best performing plans over different time periods, according to a study by savingforcollege.com One-year Performance Ranking 1 22.06 CollegeAccess529 31.76 North Carslts National College Savings Program SD 5 T.RowePrice SAVING S PLAN 28.03 LOSFA THE UNIVERSITY OF 37.78 ALASKA COLLEGE SAVINGS PLAN LA 28.13 START AK Three-year Performance Ranking 5.55 USAA 529 College Savings Plan EDVEST 29.94 WI 23.88 charles SCHWAB 529 College Savings Plan NV KS LMD 4 COLLEGE SAVINGS PLANS OF MARYLAND THE UNIVERS ITY OF College Investment Plan 32.52 ALASKA COLLEGE SAVINGS PLAN AK 31.41 Five-year Performance Ranking 19.51 USAA 32.09 529 College Savings Plan mejsp Mr 3 30.73 charles SCHWAB Michigan Education Savings Pregram 529 College Savings Plan NV KS MD COLLEGE SAVINGS PLAN S OF MARYLAND College Investment Plan THE UNIVERSITY OF ALASKA COLLEGE SAVINGS PLAN 34.11 AK 34.60 Common College Saving Myths How will saving for the cost of your children's college using a 529 plan, for instance-affect your ability to get fiñancial aid? Parents are often concerned that they will forgo free money for their children's education by holding too many assets in a college fund. This concern is a result of two myths people have about financial aid: Myth Myth Financial aid will be free money Any savings will reduce my aid dollar-for-dollar A common misconception is that, “If I save $5,000, my aid will be reduced by $5,000 – and I don't want to miss out on this money." In reality, the majority of federal financial aid offered is in the form of loans. Most federal aid consists of Stafford loans, PLUS loans, and other borrowed money. Additional loans are available privately, but they are still debt that you and your child take on. And all loans are money that will need to be paid back. The Truth Most of the aid likely will be in the form of one or more loans, which means your choice is to save now or borrow later. The Truth Your savings has a minimal effect on the federal aid you would be offered. Federal aid is based primarily on your child's income and assets, and your income. At most, only 5.6 percent of your non-retirement assets is expected to be used for college expenses each year: If you have $5,000 saved, the aid amount you'd be offered would be reduced by only $280. And the $5,000 saved is money you won't have to borrow and pay interest on later. So start investing for college early and contribute often – and don't let the myths about financial aid concern you. Saving helps you avoid debt you probably would prefer not to have, and the value of your assets only reduces financial aid offered by a minimal amount. Quite simply, you are more financially prepared to cover college costs with savings than without. How Much Do You Need To Save Each Month? How much you must save for your child will of course depend on when your child will be attending college, and what type of university they will attend. Current National Average of College Costs $36,993 per year $16,140 per year Public University Private University The Following Scenarios Assume: 80% 6% $0 success rate (The percentage of certainty that your investment goal will be met. If you want to be 100 percent sure that your investment will succeed, you will most likely need to contribute more money). 4 YEARS No initial contribution An estimated 6 percent annual inflation rate for college costs of attendance Bobby Jenny Susie • Age: Newborn •Year expected to attend college: 2029 • Age: Five (kindergarten) •Year expected to attend college: 2024 •Age: 14 (high school freshman) •Year expected to attend college: 2015 Total Cost: $202,712 Total Cost: $151,478 Total Cost: $89,659 Portfolio 2029* Portfolio 2024* Portfolio 2015* Amount To Save Monthly: $653 Amount To Save Monthly: $768.27 Amount To Save Monthly: $1,824 「 目 盟 里 Total Cost: $464,617 Total Cost: $347,189 Total Cost: $205,500 Portfolio 2029* Portfolio 2024* Portfolio 2015* Amount To Save Monthly: $1,497 Amount To Save Monthly: $1,760.88 Amount To Save Monthly: $4,188 *All three scenarios assume savings is held in an enrollment-based portfolio that is managed according to the date when the child will be starting college. Your dedication to saving for your child's education has paid off! Time to send them to campus. But don't worry, they'll be back. SOURCE: T. ROWE PRICE I SAVINGFORCOLLEGE.COM. mint. com CASH FOR COLLEGE: SAVING THE WAY FOR YOUR CHILD'S EDUCATION Young parents, right now you may think your darling little Max's ability to fling his breakfast waffle clear across the kitchen means he's destined to get an full-ride to Dartmouth on an ultimate frisbee scholarship, and that Stanford will be banging on your door with tuition incentives to lure your little Isabella just because she was the first member of her nursery school class to ditch dia pers. The reality is, your precious little snowflake will probably need to pay for college. Here's how to get started on the path to savings. What is a 529 Plan? A 529 college savings plan is a tax-advantaged, state-sponsored account designed to help you save for higher education expenses. Any earnings in the plans are not subject to federal tax or, in most cases, state tax, if used for qualified educational expenses. You can start a 529 plan regardless of your income level, and anyone – including relatives and friends – may contribute to it, up to a limit established by each plan (ranging from $235,000 to $380,000). If one child doesn't need the money for any reason, you can switch the plan to benefit another member of the beneficiary's family. 529 Plan Top Performing 529 Accounts Percentile Ranking Figures based on 2011 Q1 data When selecting a 529 plan, check first to see if there are any incentives to investing in your own state's plan, such as tax benefits. Don't forget to check the expenses on your state's plan as well. If you don't like your home state options, you are free to invest in any other state's plan. Here's a look at some of the best performing plans over different time periods, according to a study by savingforcollege.com One-year Performance Ranking 1 22.06 CollegeAccess529 31.76 North Carslts National College Savings Program SD 5 T.RowePrice SAVING S PLAN 28.03 LOSFA THE UNIVERSITY OF 37.78 ALASKA COLLEGE SAVINGS PLAN LA 28.13 START AK Three-year Performance Ranking 5.55 USAA 529 College Savings Plan EDVEST 29.94 WI 23.88 charles SCHWAB 529 College Savings Plan NV KS LMD 4 COLLEGE SAVINGS PLANS OF MARYLAND THE UNIVERS ITY OF College Investment Plan 32.52 ALASKA COLLEGE SAVINGS PLAN AK 31.41 Five-year Performance Ranking 19.51 USAA 32.09 529 College Savings Plan mejsp Mr 3 30.73 charles SCHWAB Michigan Education Savings Pregram 529 College Savings Plan NV KS MD COLLEGE SAVINGS PLAN S OF MARYLAND College Investment Plan THE UNIVERSITY OF ALASKA COLLEGE SAVINGS PLAN 34.11 AK 34.60 Common College Saving Myths How will saving for the cost of your children's college using a 529 plan, for instance-affect your ability to get fiñancial aid? Parents are often concerned that they will forgo free money for their children's education by holding too many assets in a college fund. This concern is a result of two myths people have about financial aid: Myth Myth Financial aid will be free money Any savings will reduce my aid dollar-for-dollar A common misconception is that, “If I save $5,000, my aid will be reduced by $5,000 – and I don't want to miss out on this money." In reality, the majority of federal financial aid offered is in the form of loans. Most federal aid consists of Stafford loans, PLUS loans, and other borrowed money. Additional loans are available privately, but they are still debt that you and your child take on. And all loans are money that will need to be paid back. The Truth Most of the aid likely will be in the form of one or more loans, which means your choice is to save now or borrow later. The Truth Your savings has a minimal effect on the federal aid you would be offered. Federal aid is based primarily on your child's income and assets, and your income. At most, only 5.6 percent of your non-retirement assets is expected to be used for college expenses each year: If you have $5,000 saved, the aid amount you'd be offered would be reduced by only $280. And the $5,000 saved is money you won't have to borrow and pay interest on later. So start investing for college early and contribute often – and don't let the myths about financial aid concern you. Saving helps you avoid debt you probably would prefer not to have, and the value of your assets only reduces financial aid offered by a minimal amount. Quite simply, you are more financially prepared to cover college costs with savings than without. How Much Do You Need To Save Each Month? How much you must save for your child will of course depend on when your child will be attending college, and what type of university they will attend. Current National Average of College Costs $36,993 per year $16,140 per year Public University Private University The Following Scenarios Assume: 80% 6% $0 success rate (The percentage of certainty that your investment goal will be met. If you want to be 100 percent sure that your investment will succeed, you will most likely need to contribute more money). 4 YEARS No initial contribution An estimated 6 percent annual inflation rate for college costs of attendance Bobby Jenny Susie • Age: Newborn •Year expected to attend college: 2029 • Age: Five (kindergarten) •Year expected to attend college: 2024 •Age: 14 (high school freshman) •Year expected to attend college: 2015 Total Cost: $202,712 Total Cost: $151,478 Total Cost: $89,659 Portfolio 2029* Portfolio 2024* Portfolio 2015* Amount To Save Monthly: $653 Amount To Save Monthly: $768.27 Amount To Save Monthly: $1,824 「 目 盟 里 Total Cost: $464,617 Total Cost: $347,189 Total Cost: $205,500 Portfolio 2029* Portfolio 2024* Portfolio 2015* Amount To Save Monthly: $1,497 Amount To Save Monthly: $1,760.88 Amount To Save Monthly: $4,188 *All three scenarios assume savings is held in an enrollment-based portfolio that is managed according to the date when the child will be starting college. Your dedication to saving for your child's education has paid off! Time to send them to campus. But don't worry, they'll be back. SOURCE: T. ROWE PRICE I SAVINGFORCOLLEGE.COM. mint. com CASH FOR COLLEGE: SAVING THE WAY FOR YOUR CHILD'S EDUCATION Young parents, right now you may think your darling little Max's ability to fling his breakfast waffle clear across the kitchen means he's destined to get an full-ride to Dartmouth on an ultimate frisbee scholarship, and that Stanford will be banging on your door with tuition incentives to lure your little Isabella just because she was the first member of her nursery school class to ditch dia pers. The reality is, your precious little snowflake will probably need to pay for college. Here's how to get started on the path to savings. What is a 529 Plan? A 529 college savings plan is a tax-advantaged, state-sponsored account designed to help you save for higher education expenses. Any earnings in the plans are not subject to federal tax or, in most cases, state tax, if used for qualified educational expenses. You can start a 529 plan regardless of your income level, and anyone – including relatives and friends – may contribute to it, up to a limit established by each plan (ranging from $235,000 to $380,000). If one child doesn't need the money for any reason, you can switch the plan to benefit another member of the beneficiary's family. 529 Plan Top Performing 529 Accounts Percentile Ranking Figures based on 2011 Q1 data When selecting a 529 plan, check first to see if there are any incentives to investing in your own state's plan, such as tax benefits. Don't forget to check the expenses on your state's plan as well. If you don't like your home state options, you are free to invest in any other state's plan. Here's a look at some of the best performing plans over different time periods, according to a study by savingforcollege.com One-year Performance Ranking 1 22.06 CollegeAccess529 31.76 North Carslts National College Savings Program SD 5 T.RowePrice SAVING S PLAN 28.03 LOSFA THE UNIVERSITY OF 37.78 ALASKA COLLEGE SAVINGS PLAN LA 28.13 START AK Three-year Performance Ranking 5.55 USAA 529 College Savings Plan EDVEST 29.94 WI 23.88 charles SCHWAB 529 College Savings Plan NV KS LMD 4 COLLEGE SAVINGS PLANS OF MARYLAND THE UNIVERS ITY OF College Investment Plan 32.52 ALASKA COLLEGE SAVINGS PLAN AK 31.41 Five-year Performance Ranking 19.51 USAA 32.09 529 College Savings Plan mejsp Mr 3 30.73 charles SCHWAB Michigan Education Savings Pregram 529 College Savings Plan NV KS MD COLLEGE SAVINGS PLAN S OF MARYLAND College Investment Plan THE UNIVERSITY OF ALASKA COLLEGE SAVINGS PLAN 34.11 AK 34.60 Common College Saving Myths How will saving for the cost of your children's college using a 529 plan, for instance-affect your ability to get fiñancial aid? Parents are often concerned that they will forgo free money for their children's education by holding too many assets in a college fund. This concern is a result of two myths people have about financial aid: Myth Myth Financial aid will be free money Any savings will reduce my aid dollar-for-dollar A common misconception is that, “If I save $5,000, my aid will be reduced by $5,000 – and I don't want to miss out on this money." In reality, the majority of federal financial aid offered is in the form of loans. Most federal aid consists of Stafford loans, PLUS loans, and other borrowed money. Additional loans are available privately, but they are still debt that you and your child take on. And all loans are money that will need to be paid back. The Truth Most of the aid likely will be in the form of one or more loans, which means your choice is to save now or borrow later. The Truth Your savings has a minimal effect on the federal aid you would be offered. Federal aid is based primarily on your child's income and assets, and your income. At most, only 5.6 percent of your non-retirement assets is expected to be used for college expenses each year: If you have $5,000 saved, the aid amount you'd be offered would be reduced by only $280. And the $5,000 saved is money you won't have to borrow and pay interest on later. So start investing for college early and contribute often – and don't let the myths about financial aid concern you. Saving helps you avoid debt you probably would prefer not to have, and the value of your assets only reduces financial aid offered by a minimal amount. Quite simply, you are more financially prepared to cover college costs with savings than without. How Much Do You Need To Save Each Month? How much you must save for your child will of course depend on when your child will be attending college, and what type of university they will attend. Current National Average of College Costs $36,993 per year $16,140 per year Public University Private University The Following Scenarios Assume: 80% 6% $0 success rate (The percentage of certainty that your investment goal will be met. If you want to be 100 percent sure that your investment will succeed, you will most likely need to contribute more money). 4 YEARS No initial contribution An estimated 6 percent annual inflation rate for college costs of attendance Bobby Jenny Susie • Age: Newborn •Year expected to attend college: 2029 • Age: Five (kindergarten) •Year expected to attend college: 2024 •Age: 14 (high school freshman) •Year expected to attend college: 2015 Total Cost: $202,712 Total Cost: $151,478 Total Cost: $89,659 Portfolio 2029* Portfolio 2024* Portfolio 2015* Amount To Save Monthly: $653 Amount To Save Monthly: $768.27 Amount To Save Monthly: $1,824 「 目 盟 里 Total Cost: $464,617 Total Cost: $347,189 Total Cost: $205,500 Portfolio 2029* Portfolio 2024* Portfolio 2015* Amount To Save Monthly: $1,497 Amount To Save Monthly: $1,760.88 Amount To Save Monthly: $4,188 *All three scenarios assume savings is held in an enrollment-based portfolio that is managed according to the date when the child will be starting college. Your dedication to saving for your child's education has paid off! Time to send them to campus. But don't worry, they'll be back. SOURCE: T. ROWE PRICE I SAVINGFORCOLLEGE.COM. mint. com CASH FOR COLLEGE: SAVING THE WAY FOR YOUR CHILD'S EDUCATION Young parents, right now you may think your darling little Max's ability to fling his breakfast waffle clear across the kitchen means he's destined to get an full-ride to Dartmouth on an ultimate frisbee scholarship, and that Stanford will be banging on your door with tuition incentives to lure your little Isabella just because she was the first member of her nursery school class to ditch dia pers. The reality is, your precious little snowflake will probably need to pay for college. Here's how to get started on the path to savings. What is a 529 Plan? A 529 college savings plan is a tax-advantaged, state-sponsored account designed to help you save for higher education expenses. Any earnings in the plans are not subject to federal tax or, in most cases, state tax, if used for qualified educational expenses. You can start a 529 plan regardless of your income level, and anyone – including relatives and friends – may contribute to it, up to a limit established by each plan (ranging from $235,000 to $380,000). If one child doesn't need the money for any reason, you can switch the plan to benefit another member of the beneficiary's family. 529 Plan Top Performing 529 Accounts Percentile Ranking Figures based on 2011 Q1 data When selecting a 529 plan, check first to see if there are any incentives to investing in your own state's plan, such as tax benefits. Don't forget to check the expenses on your state's plan as well. If you don't like your home state options, you are free to invest in any other state's plan. Here's a look at some of the best performing plans over different time periods, according to a study by savingforcollege.com One-year Performance Ranking 1 22.06 CollegeAccess529 31.76 North Carslts National College Savings Program SD 5 T.RowePrice SAVING S PLAN 28.03 LOSFA THE UNIVERSITY OF 37.78 ALASKA COLLEGE SAVINGS PLAN LA 28.13 START AK Three-year Performance Ranking 5.55 USAA 529 College Savings Plan EDVEST 29.94 WI 23.88 charles SCHWAB 529 College Savings Plan NV KS LMD 4 COLLEGE SAVINGS PLANS OF MARYLAND THE UNIVERS ITY OF College Investment Plan 32.52 ALASKA COLLEGE SAVINGS PLAN AK 31.41 Five-year Performance Ranking 19.51 USAA 32.09 529 College Savings Plan mejsp Mr 3 30.73 charles SCHWAB Michigan Education Savings Pregram 529 College Savings Plan NV KS MD COLLEGE SAVINGS PLAN S OF MARYLAND College Investment Plan THE UNIVERSITY OF ALASKA COLLEGE SAVINGS PLAN 34.11 AK 34.60 Common College Saving Myths How will saving for the cost of your children's college using a 529 plan, for instance-affect your ability to get fiñancial aid? Parents are often concerned that they will forgo free money for their children's education by holding too many assets in a college fund. This concern is a result of two myths people have about financial aid: Myth Myth Financial aid will be free money Any savings will reduce my aid dollar-for-dollar A common misconception is that, “If I save $5,000, my aid will be reduced by $5,000 – and I don't want to miss out on this money." In reality, the majority of federal financial aid offered is in the form of loans. Most federal aid consists of Stafford loans, PLUS loans, and other borrowed money. Additional loans are available privately, but they are still debt that you and your child take on. And all loans are money that will need to be paid back. The Truth Most of the aid likely will be in the form of one or more loans, which means your choice is to save now or borrow later. The Truth Your savings has a minimal effect on the federal aid you would be offered. Federal aid is based primarily on your child's income and assets, and your income. At most, only 5.6 percent of your non-retirement assets is expected to be used for college expenses each year: If you have $5,000 saved, the aid amount you'd be offered would be reduced by only $280. And the $5,000 saved is money you won't have to borrow and pay interest on later. So start investing for college early and contribute often – and don't let the myths about financial aid concern you. Saving helps you avoid debt you probably would prefer not to have, and the value of your assets only reduces financial aid offered by a minimal amount. Quite simply, you are more financially prepared to cover college costs with savings than without. How Much Do You Need To Save Each Month? How much you must save for your child will of course depend on when your child will be attending college, and what type of university they will attend. Current National Average of College Costs $36,993 per year $16,140 per year Public University Private University The Following Scenarios Assume: 80% 6% $0 success rate (The percentage of certainty that your investment goal will be met. If you want to be 100 percent sure that your investment will succeed, you will most likely need to contribute more money). 4 YEARS No initial contribution An estimated 6 percent annual inflation rate for college costs of attendance Bobby Jenny Susie • Age: Newborn •Year expected to attend college: 2029 • Age: Five (kindergarten) •Year expected to attend college: 2024 •Age: 14 (high school freshman) •Year expected to attend college: 2015 Total Cost: $202,712 Total Cost: $151,478 Total Cost: $89,659 Portfolio 2029* Portfolio 2024* Portfolio 2015* Amount To Save Monthly: $653 Amount To Save Monthly: $768.27 Amount To Save Monthly: $1,824 「 目 盟 里 Total Cost: $464,617 Total Cost: $347,189 Total Cost: $205,500 Portfolio 2029* Portfolio 2024* Portfolio 2015* Amount To Save Monthly: $1,497 Amount To Save Monthly: $1,760.88 Amount To Save Monthly: $4,188 *All three scenarios assume savings is held in an enrollment-based portfolio that is managed according to the date when the child will be starting college. Your dedication to saving for your child's education has paid off! Time to send them to campus. But don't worry, they'll be back. SOURCE: T. ROWE PRICE I SAVINGFORCOLLEGE.COM. mint. com CASH FOR COLLEGE: SAVING THE WAY FOR YOUR CHILD'S EDUCATION Young parents, right now you may think your darling little Max's ability to fling his breakfast waffle clear across the kitchen means he's destined to get an full-ride to Dartmouth on an ultimate frisbee scholarship, and that Stanford will be banging on your door with tuition incentives to lure your little Isabella just because she was the first member of her nursery school class to ditch dia pers. The reality is, your precious little snowflake will probably need to pay for college. Here's how to get started on the path to savings. What is a 529 Plan? A 529 college savings plan is a tax-advantaged, state-sponsored account designed to help you save for higher education expenses. Any earnings in the plans are not subject to federal tax or, in most cases, state tax, if used for qualified educational expenses. You can start a 529 plan regardless of your income level, and anyone – including relatives and friends – may contribute to it, up to a limit established by each plan (ranging from $235,000 to $380,000). If one child doesn't need the money for any reason, you can switch the plan to benefit another member of the beneficiary's family. 529 Plan Top Performing 529 Accounts Percentile Ranking Figures based on 2011 Q1 data When selecting a 529 plan, check first to see if there are any incentives to investing in your own state's plan, such as tax benefits. Don't forget to check the expenses on your state's plan as well. If you don't like your home state options, you are free to invest in any other state's plan. Here's a look at some of the best performing plans over different time periods, according to a study by savingforcollege.com One-year Performance Ranking 1 22.06 CollegeAccess529 31.76 North Carslts National College Savings Program SD 5 T.RowePrice SAVING S PLAN 28.03 LOSFA THE UNIVERSITY OF 37.78 ALASKA COLLEGE SAVINGS PLAN LA 28.13 START AK Three-year Performance Ranking 5.55 USAA 529 College Savings Plan EDVEST 29.94 WI 23.88 charles SCHWAB 529 College Savings Plan NV KS LMD 4 COLLEGE SAVINGS PLANS OF MARYLAND THE UNIVERS ITY OF College Investment Plan 32.52 ALASKA COLLEGE SAVINGS PLAN AK 31.41 Five-year Performance Ranking 19.51 USAA 32.09 529 College Savings Plan mejsp Mr 3 30.73 charles SCHWAB Michigan Education Savings Pregram 529 College Savings Plan NV KS MD COLLEGE SAVINGS PLAN S OF MARYLAND College Investment Plan THE UNIVERSITY OF ALASKA COLLEGE SAVINGS PLAN 34.11 AK 34.60 Common College Saving Myths How will saving for the cost of your children's college using a 529 plan, for instance-affect your ability to get fiñancial aid? Parents are often concerned that they will forgo free money for their children's education by holding too many assets in a college fund. This concern is a result of two myths people have about financial aid: Myth Myth Financial aid will be free money Any savings will reduce my aid dollar-for-dollar A common misconception is that, “If I save $5,000, my aid will be reduced by $5,000 – and I don't want to miss out on this money." In reality, the majority of federal financial aid offered is in the form of loans. Most federal aid consists of Stafford loans, PLUS loans, and other borrowed money. Additional loans are available privately, but they are still debt that you and your child take on. And all loans are money that will need to be paid back. The Truth Most of the aid likely will be in the form of one or more loans, which means your choice is to save now or borrow later. The Truth Your savings has a minimal effect on the federal aid you would be offered. Federal aid is based primarily on your child's income and assets, and your income. At most, only 5.6 percent of your non-retirement assets is expected to be used for college expenses each year: If you have $5,000 saved, the aid amount you'd be offered would be reduced by only $280. And the $5,000 saved is money you won't have to borrow and pay interest on later. So start investing for college early and contribute often – and don't let the myths about financial aid concern you. Saving helps you avoid debt you probably would prefer not to have, and the value of your assets only reduces financial aid offered by a minimal amount. Quite simply, you are more financially prepared to cover college costs with savings than without. How Much Do You Need To Save Each Month? How much you must save for your child will of course depend on when your child will be attending college, and what type of university they will attend. Current National Average of College Costs $36,993 per year $16,140 per year Public University Private University The Following Scenarios Assume: 80% 6% $0 success rate (The percentage of certainty that your investment goal will be met. If you want to be 100 percent sure that your investment will succeed, you will most likely need to contribute more money). 4 YEARS No initial contribution An estimated 6 percent annual inflation rate for college costs of attendance Bobby Jenny Susie • Age: Newborn •Year expected to attend college: 2029 • Age: Five (kindergarten) •Year expected to attend college: 2024 •Age: 14 (high school freshman) •Year expected to attend college: 2015 Total Cost: $202,712 Total Cost: $151,478 Total Cost: $89,659 Portfolio 2029* Portfolio 2024* Portfolio 2015* Amount To Save Monthly: $653 Amount To Save Monthly: $768.27 Amount To Save Monthly: $1,824 「 目 盟 里 Total Cost: $464,617 Total Cost: $347,189 Total Cost: $205,500 Portfolio 2029* Portfolio 2024* Portfolio 2015* Amount To Save Monthly: $1,497 Amount To Save Monthly: $1,760.88 Amount To Save Monthly: $4,188 *All three scenarios assume savings is held in an enrollment-based portfolio that is managed according to the date when the child will be starting college. Your dedication to saving for your child's education has paid off! Time to send them to campus. But don't worry, they'll be back. SOURCE: T. ROWE PRICE I SAVINGFORCOLLEGE.COM. mint. com CASH FOR COLLEGE: SAVING THE WAY FOR YOUR CHILD'S EDUCATION Young parents, right now you may think your darling little Max's ability to fling his breakfast waffle clear across the kitchen means he's destined to get an full-ride to Dartmouth on an ultimate frisbee scholarship, and that Stanford will be banging on your door with tuition incentives to lure your little Isabella just because she was the first member of her nursery school class to ditch dia pers. The reality is, your precious little snowflake will probably need to pay for college. Here's how to get started on the path to savings. What is a 529 Plan? A 529 college savings plan is a tax-advantaged, state-sponsored account designed to help you save for higher education expenses. Any earnings in the plans are not subject to federal tax or, in most cases, state tax, if used for qualified educational expenses. You can start a 529 plan regardless of your income level, and anyone – including relatives and friends – may contribute to it, up to a limit established by each plan (ranging from $235,000 to $380,000). If one child doesn't need the money for any reason, you can switch the plan to benefit another member of the beneficiary's family. 529 Plan Top Performing 529 Accounts Percentile Ranking Figures based on 2011 Q1 data When selecting a 529 plan, check first to see if there are any incentives to investing in your own state's plan, such as tax benefits. Don't forget to check the expenses on your state's plan as well. If you don't like your home state options, you are free to invest in any other state's plan. Here's a look at some of the best performing plans over different time periods, according to a study by savingforcollege.com One-year Performance Ranking 1 22.06 CollegeAccess529 31.76 North Carslts National College Savings Program SD 5 T.RowePrice SAVING S PLAN 28.03 LOSFA THE UNIVERSITY OF 37.78 ALASKA COLLEGE SAVINGS PLAN LA 28.13 START AK Three-year Performance Ranking 5.55 USAA 529 College Savings Plan EDVEST 29.94 WI 23.88 charles SCHWAB 529 College Savings Plan NV KS LMD 4 COLLEGE SAVINGS PLANS OF MARYLAND THE UNIVERS ITY OF College Investment Plan 32.52 ALASKA COLLEGE SAVINGS PLAN AK 31.41 Five-year Performance Ranking 19.51 USAA 32.09 529 College Savings Plan mejsp Mr 3 30.73 charles SCHWAB Michigan Education Savings Pregram 529 College Savings Plan NV KS MD COLLEGE SAVINGS PLAN S OF MARYLAND College Investment Plan THE UNIVERSITY OF ALASKA COLLEGE SAVINGS PLAN 34.11 AK 34.60 Common College Saving Myths How will saving for the cost of your children's college using a 529 plan, for instance-affect your ability to get fiñancial aid? Parents are often concerned that they will forgo free money for their children's education by holding too many assets in a college fund. This concern is a result of two myths people have about financial aid: Myth Myth Financial aid will be free money Any savings will reduce my aid dollar-for-dollar A common misconception is that, “If I save $5,000, my aid will be reduced by $5,000 – and I don't want to miss out on this money." In reality, the majority of federal financial aid offered is in the form of loans. Most federal aid consists of Stafford loans, PLUS loans, and other borrowed money. Additional loans are available privately, but they are still debt that you and your child take on. And all loans are money that will need to be paid back. The Truth Most of the aid likely will be in the form of one or more loans, which means your choice is to save now or borrow later. The Truth Your savings has a minimal effect on the federal aid you would be offered. Federal aid is based primarily on your child's income and assets, and your income. At most, only 5.6 percent of your non-retirement assets is expected to be used for college expenses each year: If you have $5,000 saved, the aid amount you'd be offered would be reduced by only $280. And the $5,000 saved is money you won't have to borrow and pay interest on later. So start investing for college early and contribute often – and don't let the myths about financial aid concern you. Saving helps you avoid debt you probably would prefer not to have, and the value of your assets only reduces financial aid offered by a minimal amount. Quite simply, you are more financially prepared to cover college costs with savings than without. How Much Do You Need To Save Each Month? How much you must save for your child will of course depend on when your child will be attending college, and what type of university they will attend. Current National Average of College Costs $36,993 per year $16,140 per year Public University Private University The Following Scenarios Assume: 80% 6% $0 success rate (The percentage of certainty that your investment goal will be met. If you want to be 100 percent sure that your investment will succeed, you will most likely need to contribute more money). 4 YEARS No initial contribution An estimated 6 percent annual inflation rate for college costs of attendance Bobby Jenny Susie • Age: Newborn •Year expected to attend college: 2029 • Age: Five (kindergarten) •Year expected to attend college: 2024 •Age: 14 (high school freshman) •Year expected to attend college: 2015 Total Cost: $202,712 Total Cost: $151,478 Total Cost: $89,659 Portfolio 2029* Portfolio 2024* Portfolio 2015* Amount To Save Monthly: $653 Amount To Save Monthly: $768.27 Amount To Save Monthly: $1,824 「 目 盟 里 Total Cost: $464,617 Total Cost: $347,189 Total Cost: $205,500 Portfolio 2029* Portfolio 2024* Portfolio 2015* Amount To Save Monthly: $1,497 Amount To Save Monthly: $1,760.88 Amount To Save Monthly: $4,188 *All three scenarios assume savings is held in an enrollment-based portfolio that is managed according to the date when the child will be starting college. Your dedication to saving for your child's education has paid off! Time to send them to campus. But don't worry, they'll be back. SOURCE: T. ROWE PRICE I SAVINGFORCOLLEGE.COM. mint. com