Planning Strategies
  • Planning strategies for young children

    Never too early
    to start

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  • Planning strategies for middle school students

    Save some today, borrow less tomorrow

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  • Planning strategies for high school students

    Closing in on
    higher ed

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  • Planning strategies for adult education

    Training to
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How to Plan for Higher Education Expenses

Tomorrow’s opportunities can be a reality for every Texan at any stage. Learn what a two-year or four-year college or technical education might cost and create a path to get there. Use our strategies to determine the best options for you — select the strategy above that matches your timeline.

Save Now or Borrow Later

It’s less expensive to save for college than to borrow, no matter how late you start. When you save, the money earns interest, but when you borrow, you’re paying the interest. Using a 529 plan will allow you to withdraw funds for “qualified” college expenses tax-free. For example, saving $200 a month in a 529 plan for ten years at 7 percent interest would yield $34,818.89. Borrowing the same amount at 6.8 percent interest with a ten-year term would require payments of $400.70 a month and would cost $13,265 more in interest.

This chart shows a hypothetical example of savings for intervals of 5, 10, 15 and 18 years. The estimated values assume that contributions of $15, $150 and $100 per month are made at the beginning of the month with a 7% annual return. Assumes that the money is invested in a tax-free investment vehicle, such as a Texas 529 Savings Plan, but it should not be considered an indication of performance of the Texas 529 plans.

Prepaid Tuition as Part of Your Savings Strategy

Over the past decade, public college costs have risen at an average rate of 6.9 percent per year and four-year private college costs have risen at an average rate of 5.8 percent per year, according to the College Board’s Trends in College Pricing 2008. At these rates, in 16 years, tuition alone could cost three times as much as today.

Whether you’re planning 5, 10 or 18 years ahead, protect yourself from rising tuition costs and save thousands of dollars. Use our tuition planning calculator to find out what tuition types and payment options may best meet your goals.

Start saving today for just $25