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Saving for College

Resources to help you save for college

Saving for education is a journey — start yours with confidence

Learn more about the different steps you can take to plan and save for college expenses
What would you like the power to do?®
Set educational goals

How much does college cost?

College requires an investment — with costs averaging more than $60,000 per year for private college, parents are looking for ways to save more.
Nearly 9 in 10 undergraduate families believe college is an investment in the student's future (88%) and earning a college degree will create opportunities that wouldn't be available otherwise (86%). Both students and parents are willing to stretch financially to obtain these opportunities (79%).Footnote 1

Average cost of one year at a four-year college or university, including tuition, fees, room and board

How much should I be saving?

A good place to start is by identifying a savings plan that works for your finances. Our College Planning Calculator can help you prepare for the cost of higher education by determining how much you may need to save for college expenses.
Explore ways to pay

How will you pay?

Be realistic about the amount of college costs you can take on without jeopardizing your other financial goals and priorities.
You don't have to do it all on your own. Depending on your goals, your current savings, and your thoughts about borrowing, you — like many other families — may decide to use a combination of these funding options.

How America Pays for College

Item 1 of 6:  Parent income & savings  37%  Parents contributed an average of $10,697 from income and savings.
Item 2 of 6:  Scholarships & grants  27%  Families received an average of $7,585 from scholarships and grants. Go to third-party website  Learn more about scholarships and grants popup
Item 3 of 6:  Student borrowing  12%  There are many federal and private student loan options. Students borrowed an average of $3,335/yr. Go to third-party website  Learn more  about student borrowing popup
Item 4 of 6:  Student income & savings  11%  Through their jobs (either all year or on school breaks), students contribute an average of $3,068.
Item 5 of 6:  Parent Borrowing  11%  Federal loans are also available to parents. On average, parents borrowed $3,063.
Item 6 of 6:  Gifts from relatives & friends  2%  Gifts contributed an average of $662.
How Americans pay for college 2024, Sallie Mae

Discover the power of starting early

The most important thing you can do is start saving and investing for college early — even if you've only got a little to put away at first — small amounts can add up over time. It's all in the power of compounding.
This chart shows how monthly contributions of $100, $200 and $300 could grow.

Monthly contributions can help you save for college

Item 1 of 12: $300 monthly contribution after 5 years -  $25,923
Item 2 of 12: $200 monthly contribution after 5 years - $17,282
Item 4 of 12: $300 monthly contribution after 10 years - $55,897
Item 5 of 12: $200 monthly contribution after 10 years - $37,265
Item 7 of 12: $300 monthly contribution after 14 years - $87,246
Item 8 of 12: $200 monthly contribution after 14 years - $58,164
Item 10 of 12: $300 monthly contribution after 18 years - $127,074
Item 11 of 12: $200 monthly contribution after 18 - $84,716
This chart is a hypothetical example meant for illustrative purposes only. It does not reflect an actual investment in a particular 529 plan, nor does it account for the effects of taxes, any investment expenses, fees or withdrawals. Returns are not guaranteed, and results will vary. Investment returns cannot be predicted and will fluctuate. Investor results may be more or less. It is not intended to serve as investment advice, since the availability and effectiveness of any strategy are dependent upon your individual facts and circumstances.
This chart assumes that $100, $200 or $300 is invested on January 1 every year for 18 years, with a 6% rate of return, compounded annually.

Tip

If your child is "graduating" from day care to public elementary school, consider taking the money you have been paying every month for day care and redirecting it into a 529 education savings plan.
Compare accounts

Which account is right for your family?

In 2024, one-third of families in the U.S. used an education savings account to help pay for college costs.Footnote 2 Two types of education savings accounts are Section 529 (or 529 plan) accounts and the Uniform Gifts to Minors Act and Uniform Transfer to Minors Act (or UGMA and UTMA accounts).
Planning tips

Review and update the family budget

If you're helping your student pay for college expenses, don't forget to update your budget to ensure you've got it all covered — tuition, books, room and board, travel expenses or whatever you agreed to help fund for them. Try the Bank of America Spending and Budgeting tool.

Start preparing for the future

Bank of America can help students and young adults on their journey to financial independence. Learn more about the educational resources, financial guidance, banking solutions and tools to help support their success.

Frequently Asked Questions

Ready to get started?

Footnote 1 How America Pays for College: 2024, Sallie Mae

Footnote 2 College Board, "Trends in College Pricing and Student Aid", 2024

Footnote 3 Owners of 529 accounts can roll over 529 assets into a Roth IRA with no federal tax penalty, subject to the following conditions:

The 529 account has been open for at least 15 years.
The Roth IRA is in the same name as the 529 account beneficiary.
The rollover does not exceed (i) Roth IRA annual contribution limits or (ii) the amount of annual compensation (as defined in the Internal Revenue Code) of the Roth IRA owner. However, Roth IRA income limits do not apply to a rollover from a 529 plan account to a Roth IRA.

The rollover is limited to:
The aggregate amount of contributions made to the 529 account (and any earnings) before the 5-year period ending on the date of the rollover; and
A lifetime rollover limit of $35,000 per 529 account beneficiary

Investing involves risk including possible loss of principal. Past performance is no guarantee of future results.

This information should not be construed as investment advice and is subject to change. It is provided for informational purposes only and is not intended to be either a specific offer by Bank of America, Merrill or any affiliate to sell or provide, or a specific invitation for a consumer to apply for, any particular retail financial product or service that may be available.

Before you invest in a Section 529 plan, request the plan's official statement from your Merrill Financial Solutions Advisor and read it carefully. The official statement contains more complete information, including investment objectives, charges, expenses and risks of investing in the plan, which you should carefully consider before investing. You should also consider whether your home state or your designated beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds and protection from creditors that are available only for investments in such state's 529 plan. Section 529 plans are not guaranteed by any state or federal agency.
Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.
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