Save now for a brighter tomorrow

College might feel like a distant concern when you're in the midst of sleepless nights and diaper duty, but the sooner you start saving for your child’s education, the bigger the impact you can potentially make. Beginning now may help you avoid the regret of saying, “I wish we had started sooner!” By taking small steps today, you can potentially build a solid foundation for your child’s future and make the journey to college a little smoother for everyone.

Tuition will likely grow faster than your children

According to the CollegeBoard’s Trends in College Pricing 2023 report, the average tuition and fees for the 2023-2024 academic year are $41,540 at private nonprofit four-year colleges, $11,260 for in-state students at public four-year colleges, and $29,150 for out-of-state students at public four-year colleges.

Looking ahead, tuition and fees are expected to increase 3%-5% annually¹. This means that for a child born in 2024, the average tuition and fees at a private college could reach approximately $84,152 by the time they are 18. This projected cost is more than double the current average, highlighting the importance of starting a college savings plan as early as possible.

By beginning to save now, parents can take advantage of compound growth and potentially keep pace with — or even outpace — the rising costs of tuition. This proactive approach may provide families with more options and financial flexibility when making decisions about higher education.

The fewer the loans, the better

Taking out loans for college can be a financial burden for both students and parents, with long-term consequences that extend far beyond graduation. The more parents save now, the fewer loans they might need to take out later — which could significantly lower the overall cost of college by avoiding hefty interest payments.

Loans not only increase the total cost of education due to interest but also add a layer of financial stress that can impact a family’s broader financial health. For students, loan payments can take years, if not decades, to pay off, often affecting their ability to save for other goals like buying a home, starting a family, or investing for their future. It’s not just about paying off a debt; it’s about delaying other life goals and opportunities.

For parents, taking on loans to fund their children’s education can disrupt their plans for retirement or other significant financial goals. Even worse, some parents may be forced to dip into their retirement savings, putting their future financial security at risk. The anxiety of managing this debt can also strain family dynamics and limit their financial flexibility in unexpected situations.

By starting to save in a 529 plan early, parents can build up a dedicated fund that can potentially reduce or eliminating the need for loans altogether. This means less stress about the future and more freedom to focus on what matters most: supporting their children in achieving their dreams without compromising their own financial stability.

A 529 savings plan can help you save more

The potential for tax-free growth in a 529 college savings plan can make a significant difference compared to a taxable account. For instance, an initial $10,000 investment in a 529 plan could grow to nearly $6,000 more over 18 years than in a taxable account, assuming both earn a 5% annual return². Most families contribute regularly to their 529 plans rather than making a single lump-sum investment, which could result in even greater savings over time.

Get ahead with a CollegeBound 529 plan

A CollegeBound 529 plan is a straightforward and powerful way to save for your child's future education. By starting early, you can take advantage of tax-free growth and flexible options, reducing the financial burden of college for both you and your child.

Remember, the sooner you start saving, the more time your money has to grow. Don't wait — start building your child's educational fund today and give them a head start toward a bright future. When it comes to your child's future, every little bit counts.