Updated: Nov 10, 2021
The price of education has gotten expensive. Tuition rates have outpaced general inflation rates for years and it is assumed that higher education will only continue to increase in price. According to published data, the average cost of college in the US is $35,720 per student per year. The cost has effectively tripled in 20 years at an annual growth rate of 6.8% (Hanson, Melanie. Average Cost of College & Tuition. July 2021). That rate of price increase outpaces the US' general 2% rate of inflation.
So what can be done?
Don't wait until it's time for your child to attend college to start worrying about how to pay for it. Starting early with ongoing contributions will make a huge difference over time. This is where a 529 College Savings Fund really shines. Using this strategy will help you reach the education goals for those you care most about.
A 529 plan is used to save for a child, grandchild, or other child's future education. This type of plan also pays for graduate school studies. The money saved in the account helps cover all the following:
Room and Board
Books, supplies, and other required equipment
Computers and technology
Up to $10,000 in tuition expenses at elementary or secondary public and private schools
The 529 College Savings Fund is all about setting up your child for a future of options. Having options provides flexibility in opportunities and personal growth. By saving in advance, there will be less reliance of big student loans with high interest rates. With less loans having to be repaid, there will be stress and a lower need to work long hours to try and repay the outstanding loans. With a lower need to work long hours, there is time to develop other skills and form stronger relationships which will produce results that will compound for years to come.
The Bottom Line
Education has become a privilege due to the high cost required to get into a traditional university. By starting a college fund early, you can help provide your child or loved one with more opportunities to attend the program they want without worrying about a big debt.