Thinking about going back to school? Need a new trade, like mechanic, hairdresser, computer analyst? A college savings fund can help you make your dreams come true – without going into debt for school!
Adults can open a 529 college savings fund – for yourself. You don’t have to be a kid to save for college.
Maybe you are twenty something, newly married, have a child and are thinking about going back to school in a few years after the kid is grown a bit – but you aren’t sure if you’ll be having more children, therefore putting off the schooling, or going back in three years.
Open a 529, and your savings will start to grow – tax free. It will be ready and waiting when you are to continue your schooling.
Perhaps you are in your forties, your children are grown and you are thinking of returning to school, but do not know when. Just open the account now, allow it to grow, and the money will be there for you.
Here are some calculations based upon the MSN money calculator:
Assumptions:
- 10 years to save before college.
- $1,000 initial deposit.
- $10,000 annual cost for college
- 7% inflation increase for college costs per year! (oh tell me this isn’t’ so!)
Results:
Starting with $1,000, you need to save $5,487 annually over 10 years (at a rate of return 9.00 %, compounded monthly and taxed at your marginal rate of 22.05 %.) Based on the current annual cost of college of $44,399, the total college cost will be $87,340.
Total cost of college $87,340
Annual payment required $5,487
Initial balance $1,000
Total deposits $54,867
Total interest earned $31,473
Total taxes paid $0
Total available for college $87,340
As you can see, saving ahead for college will be better than racking up student loans! If you can, start saving now. Even saving for a couple of years will help your tuition costs immensely!
More on number crunching: