Learning and Planning
College planning guide
College planning calculator
Other college savings options
Contact a financial advisor




College Planning Guide
"A penny saved is a penny earned."
–Ben Franklin

No matter how much you need to save, the most important step is the first one. Getting started is half the battle, and the price of procrastination can be costly.

Benefits of saving now
How will you pay for college?
Benefits of Saving Now

Every year, thousands of families use loans to cover college-related expenses. Taking this approach, they may be setting themselves up for a financial burden that's far greater than they realize.

For example, if your child is scheduled to enter college in 18 years, 4 years at a public university may cost over $185,000.2 You could either begin investing regularly now or wait until 2026 and finance the costs. By investing in your child's education now, you could save money in the long run.

Consider a hypothetical scenario:


The Smith Family The Jones Family
Saves Now Borrows Later
$82,684 = Cost of Investment $293,933 = Cost of College Loan
Investment fees and expenses and taxes would lower the savings amount and increase the cost of investment shown. Each plan account is subject to an annual program management fee of 0.40% of assets and underlying fund expenses, currently up to 0.82% of assets, which may vary. See the Investor Handbook for more complete information.

Tax benefits may be conditioned on meeting certain requirements. Federal tax, a 10% penalty and state tax apply to nonqualified withdrawals of earnings. Generation-skipping tax may apply to substantial transfers to a beneficiary at least two generations below the contributor. See the Investor Handbook for more complete information.
This hypothetical example is based on the total cost of a 15-year, 6.80% loan versus the total cost of an investment earning an 8% fixed tax-free return on regular monthly investments of $383 over a 18-year period. Assumes principal is fixed. This example is for illustrative purposes only and does not reflect an actual investment. 529 plans do not guarantee your investment or any specific rate of return and you may have a gain or loss on the amounts invested.3

NJBEST qualified withdrawals are free from New Jersey state income tax for New Jersey taxpayers only; taxpayers of other states may be subject to state income taxes on qualified withdrawals. If you pay state taxes in other states, you should evaluate whether the state(s) offer(s) tax incentives or benefits that may not be available to you or your beneficiary under NJBEST.

Periodic investment plans do not assure a profit and do not protect against loss in a declining market. Since such plans involve continuous investment in securities regardless of their fluctuating price levels, it's prudent to consider your financial ability to continue making purchases through periods of low price levels.

The Smarter Choice

The Smith family could save more than $211,000 by starting a regular investment program now, unlike the Jones family who chooses to wait and borrow money later. Compounding of any earnings works in the Smiths' favor: rather than paying interest on a loan, they could potentially benefit from the growth of a long-term investment program.
How Will You Pay for College?

Most parents rank saving for college as a top financial goal. Even teenagers are becoming concerned (67% surveyed) about not having money for their education4.

Don't be intimidated by education's steep price tag. The key is investing early and regularly. Having a savings plan allows even parents with the tightest budgets to put aside a little for their children's future. Take the following factors into consideration when creating your college savings plan.

Estimate how much you need to save. To calculate the cost of your child's college education, use our College Planning Calculator. It will estimate what you can expect to pay when your child is ready to enter college.

Estimate how much you can afford to invest each month. Once you know approximately how much you're going to need, determine how much you can afford to allocate monthly. Since few of us can afford a single, lump-sum investment, saving smaller amounts consistently over time can be a more practical alternative.

Investing a fixed amount at regular intervals allows you to take advantage of dollar-cost averaging, which lets you buy more shares when prices are low and fewer shares when prices are high.5 In fact, investing as little as $100 a month can make a substantial impact over time.

Potential Growth of Monthly Investments Over Time
Monthly Investments 5 Years 10 Years 15 Years 20 Years
$50 $3,698 $9,208 $17,417 $29,647
$100 $7,397 $18,417 $34,835 $59,295
$300 $22,190 $55,250 $104,504 $177,884
This hypothetical example illustrates the future value of different regular, monthly investments for different periods of time and assumes an annual effective after-tax investment return of 8%. This example does not reflect an actual investment or the effects of any taxes or investment fees and expenses, which would lower the amounts shown. Share price and return will vary, and different investments may outperform or under perform this example. Periodic investment plans do not assure a profit and do not protect against loss in a declining market. Since such plans involve continuous investment in securities regardless of their fluctuating price levels, it's prudent to consider your financial ability to continue making purchases through periods of low price levels.

Financial aid. Relying solely on financial aid may not be the best strategy, but many different types of assistance are available, including grants, scholarships, loans and work-study programs. While your family may not be eligible for every financial aid program, you may qualify for some, and it's a good idea to explore which programs can help you reach your goal.

Each college savings plan affects financial aid differently. Before you selecting a savings plan, consult your financial advisor to discuss your best savings option.




Investors should carefully consider plan investment goals, risks, charges and expenses before investing. To obtain the Investor Handbook, which contains this and other information, call Franklin Templeton Distributors, Inc., the manager and underwriter for the plan, at 1-877/4NJBEST or click here. You should read the Investor Handbook carefully before investing and consider whether your or the beneficiary's home state offers any state tax or other benefits that are available for investments only in its qualified tuition program.

Footnote
1. Offered and administered by the New Jersey Higher Education Student Assistance Authority (HESAA); managed and distributed by Franklin Templeton Distributors, Inc., an affiliate of Franklin Resources, Inc., which operates as Franklin Templeton Investments. No federal or state guarantee. Principal value may be lost, and investing in the plan does not guarantee admission to college or sufficient funds for college. Please refer to the Investor Handbook for more complete information.
2. Source: The College Board, Trends in College Pricing, Fall 2007. Projected cost for 4 years at a public college. Figures are based upon a 6.17% 10-year average annual increase in public college costs as reported by the College Board for the '07-'08 school year.
3. Source: Salliemae.com, based on the Stafford loan issued by Salliemae after July 1, 2006.
4. Source: www.finaid.org, 2004.
5. Periodic investment plans do not assure a profit and do not protect against loss in a declining market. Since such plans involve continuous investment in securities regardless of their fluctuating price levels, it's prudent to consider your financial ability to continue making purchases through periods of low price levels.

Relevant Links

Investor kit