Saving Wisely for College
The cost of college is skyrocketing! According to the College Board, tuition, fees, and room and board averaged $15,213 for in-state students at four-year public institutions in 2009.1 Those same expenses soared to $35,636 for students at private nonprofit colleges and universities. Whoa! Assuming a 6 percent rate of inflation, a child matriculating in eight years will face an average tab of nearly $250,000 for a four-year private-school education.2 And since college costs have risen faster than overall inflation for most of the last 30 years, even a 6 percent yearly increase in educational expenses may not be enough. Grandparents, sound daunting? Imagine how your children feel!
College Nest Eggs 101
The 529 plan, which has become one of the most popular savings strategies lets families save for college by investing in tax-free, state-sponsored funds. “A 529 plan can be a terrific way to save,” says Cindy Bailey, Senior Policy Analyst of Education Finance for the College Board. “They are especially popular with grandparents who like to enroll the child as soon as they are born.” Not all 529 plans offer the same investment options and benefits — such as tax-deductible contributions — so ask your Financial Advisor to find the plan that works best for your family. You can invest in 529 programs offered in any state, but if the money isn’t used for college, the earnings are subject to federal income tax, and a 10 percent penalty is imposed.
For more information, contact Wells Fargo Advisors.
1The College Board. Trends in College Pricing 2009; Annual Survey of Colleges. http://www.trends-collegeboard.com/college_pricing/ppt/2009_Trends_College_Pricing.ppt
2 FinAid: The Smart Student Guide to Financial Aid.
Before investing in a 529 plan, please consider its investment objectives, risks, charges and expenses carefully. The official statement, which contains this and other information, is available from us. Read it carefully before you invest. As with all tax-related decisions, consult with your tax advisor.
Investments in securities and insurance products are: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE
Wells Fargo Advisors, LLC, Member SIPC, is a registered broker-dealer and a separate non-bank affiliate of Wells Fargo & Company.