Start Small – but get Started

March 16, 2020 settings

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Children with a college savings account in their name were six times as likely to attend college as those without one, researchers have found.* Surprisingly, the amount of money in the account didn’t matter. Just having the account set a clear expectation for the child.

You don’t have to save it all

Savings is only one source of money for college. Scholarships, financial aid, work study, loans, and tax credits are enabling a record number of Americans-more than 20 million-to attend college.**

The important thing is to get started-even if it’s just with the change from your coin jar. Because it’s still a big investment in your child.

How $25 a week can add up

John and Sue want to start saving for Justin’s college as soon as he is born. They decide to save $25 a week through John’s payroll deduction.

By the time Justin is 18 and packing for college, their account has grown to more than $40,000.*** That will cover the total costs of two years at State U. John and Sue decide to pay for one more year of college from their current earnings and ask Justin to take out loans to pay for his final year at college.

*Source: The Role of Savings and Wealth in Reducing “Wilt” between Expectations and College Attendance, by William Elliott III and Sondra Beverly, January 2010 Research Brief published by the Center for Social Development at the George Warren Brown School of Social Work at Washington University in St. Louis.

**Source: U.S. Department of Education, National Center for Education Statistics, Fast Facts: Back to School Statistics 2017.

***Assumes a 6% average annual return. This hypothetical example does not represent the return of any particular investment and the rate is not guaranteed. The final balance does not reflect any taxes or penalties that may be due upon distribution.

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