User: College

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How Much to Invest in a 529 College Savings Program
College costs are going higher every year. Savings account interest rates are low and investments can be risky.A 529 college savings plan is a great way to put away money for your child’s education. But if your asking yourself "How much can I invest in a 529 college savings plan," read on.

A 529 college savings plan is a newer type of investment that has already gone through a roller-coaster of debate with regards to the effectiveness and need. Sometimes it’s best to look into the details of the plans and find out if it is right for you. Here is some information that may help with that decision.

If you have decided to invest in a 529 College Savings plan your next question is definitely going to be, "How much can I invest in a 529 college savings plan?" Let’s take a look at the factors to consider before determining how much to invest. We will look at ways of finding out how much you will need to invest to reach your goals first.

The Growing Cost of A College Education.
The first thing to consider is how much is a college education going to cost when the perspective student is ready for college. This figure will be important when setting up a 529.

The average increase for college tuition is about 4 to 6% per year. In order to find out the cost of a college education, you will have to figure out how many years before your perspective student will begin college and then make the calculation for each year. Ok, I’ll make this part simpler. Here is a table you can use to calculate the cost for the amount of years.

1 = 1.05 11 = 1.71 21 = 2.79

2 = 1.10 12 = 1.80 22 = 2.93

3 = 1.16 13 = 1.89 23 = 3.07

4 = 1.22 14 = 1.98 24 = 3.23

5 = 1.28 15 = 2.08 25 = 3.39

6 = 1.34 16 = 2.18

7 = 1.41 17 = 2.29

8 = 1.48 18 = 2.41

9 = 1.55 19 = 2.53

10 = 1.63 20 = 2.65

(Table figures are based on a 5% increase per year.)
Here is an example.

A student wishing to go to college in 10 years and the current college tuition rates are $10,000.00. Take 10000.00 and multiply by 1.63 (reference number ten above.)

The cost of that same college in ten years would be $16300.00 per year.

If you are wondering, "How much can I Invest in a College Savings Program," then you have come to the right place! Let Bright Hub show you how.

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