When Saving for Your Child’s College
Education, Time May Not be on Your Side.
Assuming s/he will begin school at age eighteen, the following examples present a compelling argument for beginning early.
Emily is 10 this year and she wants to go to her state school, like her Dad,
and become a journalist. Her parents already have saved $5,000 and want to
make sure they have her education paid for by the time she enters school.
If they begin today they will need to save about $714 a month, but if they wait till Emily turns 15 it could cost them $1,887 a month.
Ben was born in 2005. His
parents would like to see
him attend Notre Dame and
they began investing with
College Savings Bank right
away to help them achieve
their goal. In order to have
college paid for by the time
Ben turns eighteen, they
need to deposit $1,421 a
month in his college savings account. If they wait till he is 5, they will need to deposit about $1,816 a month.
Ron receives a yearly bonus from his company that
he plans to invest in a College Savings Bank account
for his son. He hopes that Jimmy will one day graduate from an Ivy League school, he is now 3. If he begins this year, he will need to invest $17,510
a year to fund Jimmy’s education. If he waits till he is 13 years old, he will need to invest $44,534 each year.
The examples above are approximations, intended to demonstrate
the benefit of compounding interest when considering a timetable
to invest. Each is based upon the 5.62% college inflation rate for
the twelve months ended July 31, 2005 and new CollegeSure CD
pricing. To evaluate your specific investment needs, visit our Website or call a College Savings Adviser today at 800-888-2723.