How 529 Plans Work

The Cost of College

College is expensive, and it keeps getting more expensive. It's tough to predict what college is going to cost in 10 or 15 years, because the cost can't keep spiraling upward endlessly. But the best way to get an idea of what college costs will look like in the future is to look at the real numbers. What does college cost today, and how much have those costs risen in the last ten years?

Based on U.S. Department of Education data, the Institute of Education Sciences reported that costs for undergraduate tuition, room and board at a public college or university during the 2010–11 academic year totaled $13,600. Of course, those costs skyrocket if you go private: Prepare to spend about $36,300 at private not-for-profit institutions, and $23,500 at private for-profit institutions. These costs have only risen in the last few years: The Institute of Education Sciences also reports that "between 2000–01 and 2010–11, prices for undergraduate tuition, room, and board at public institutions rose 42 percent, and prices at private not-for-profit institutions rose 31 percent, after adjustment for inflation. The inflation-adjusted price for undergraduate tuition, room, and board at private for-profit institutions was 5 percent higher in 2010–11 than in 2000–01 [source: Institute of Education Sciences]."

In other words, saving money now for college is not a bad idea, and a 529 plan might be a good way to do it.