Today, the average cost of a four-year undergraduate education is more than $93,680 at a public college and more than $208,040 at a private college.1
That’s a considerable amount for any family to accrue, but if you start saving early, you can potentially take advantage of the power of compounding savings and interest for a longer period of time.
In the chart below, you can see how 529 plan contributions might grow if you start with $5,000 when your child is a newborn and continue saving an additional $100 per month until your child turns 18.
This chart assumes a $5,000 lump sum investment, $100 monthly investments and 5% annual rate of return. The calculations are for illustrative purposes only, and the results are not indicative of the performance of any investments. The calculations do not reflect any plan fees or charges that may apply. If such fees or charges were taken into account, returns would have been lower. With any long-term investment, investment returns may vary. Such automatic investment plans do not assure a profit or protect against losses in declining markets. Any earnings are federal tax free if used for qualified education expenses.
1Source The College Board, “Trends in College Pricing and Student Aid 2020”. The average yearly estimated full-time undergraduate budget for tuition and fees, room and board, and books and supplies is $23,420 for in-state public four-year institutions (on campus) and $52,010 for private non-profit four-year institutions (on campus). The estimated costs for both public and private institutions assume the account beneficiary will start college at the age of 18. Please note that this is only an estimate and does not include transportation or other expenses.