Everyone needs to save.
College costs add up.
There are many different types of schools that you can save for. Think beyond universities, and outside your state. With 529 college savings accounts, you can save for virtually any type of accredited two-year or four-year school including a public or private university, community college or vocational or trade school as well as for graduate schools in the United States and abroad. Just as the types of schools vary, so do their costs.
The graphic above uses data collected by the College Board to show the difference in total costs for various types of colleges across the U.S.
||Source: The College Board, Trends in College Pricing 2014. Figure 1: Average Estimated Full-Time Undergraduate Budgets by Sector, 2014-15 (Enrollment-Weighted)
||Source: The College Board, Trends in College Pricing 2014. Tuition and Fees: Calculated the average by region from Figure 10: 2014-15 Tuition and Fees at Flagship Universities and Five-Year Percentage Change in Inflation-Adjusted In-State Tuition and Fees. Data for Books and Supplies, Transportation and Other Expenses: Figure 1: Average Estimated Undergraduate Budgets, 2014-15 (Enrollment-Weighted). Tuition and Fees and Room and Board. Data for Non-state resident room and board: Identified actual room and board for each school listed by the College Board as Flagship Universities (Figure 10) and averaged by region from 2013-2014 Institute of Education Sciences of the National Center for Education Statistics, CollegeNavigator website
Source for all other data: The College Board, Trends in College Pricing 2014. Data for Books and Supplies, Transportation and Other Expenses: Figure 1: Average Estimated Undergraduate Budgets, 2014-15 (Enrollment-Weighted). Tuition and Fees and Room and Board: Figure 2. Average Tuition and Fees and Room and Board by Sector and College Board Region, 2014-15 (Enrollment-Weighted)
It's less expensive to save than to borrow.
We all know that savings earns interest and borrowing requires paying interest. Borrowing can add stress for both parents and students and the repayment can be daunting. For parents, retirement might be just a few short years away and for a graduate, their independent life is just beginning. Saving on the front end can alleviate some of the financial stress down the road.
As the chart below illustrates, it's wise to save now rather than spend so much more in the future to pay back loans.