When it comes to paying for higher education
should you save or borrow?
Meet Sue. When Sue was born, her family started investing in a 529 college savings account.
Sue's family contributed a hundred dollars a month for eighteen years
for a total of twenty-one thousand six hundred dollars.
With a five percent annual rate of return
their account earned an additional thirteen thousand four hundred dollars
for total thirty-five thousand dollars
that Sue can use for qualified higher education expenses like tuition,
room and board and school supplies.
Meet Brian. Brian is 18 years old and he's borrowing some of the money he needs to pay for college.
Brian is getting a private student loan for thirty five thousand dollars
with a seven percent annual interest rate. If Brian pays off his loan
making monthly payments of 406 dollars for 10 years
his thirty five thousand dollar loan
will cost him over 48,000 dollars.
Both Sue and Brian have thirty-five thousand dollars to put toward their education.
Here's what's different: Sue's out-of-pocket cost
is 21,600 dollars. Brian's out-of-pocket cost
is forty-eight thousand seven hundred twenty dollars.
You can't put a price tag on the educational experiences Sue and Brian will have
but you can see the value of saving versus borrowing.
While it may not be possible for you to save as much as Sue's family,
any amount you save will help to offset the amount your child has to borrow.
Save now so the only things that stay with your child after graduation
are lessons learned and memories made-- not debt.
Investment returns are not guaranteed and you could lose money by investing in the Plan.
Before you invest consider whether your or the designated beneficiary's home state
offers any state tax or other benefits that are only available for investments in such state's qualified tuition program.
For more information about New York's 529 College Savings Program Direct Plan
obtain a program brochure and tuition savings agreement at www.NYsaves.org or by calling 1-877-NYsaves.
This includes investment objectives, risks, charges, expenses and other information.
You should read and consider them carefully before investing.