Put time on your side with compounding

A big reason to save for college as soon as you can: compound interest.

When you open any kind of savings account, money market, CD, Coverdell ESA, UGMA/UTMA, or 529 plan, your contributions grow with the account’s interest. Leave that interest in your account and the new total (your savings and the interest you’ve earned) will continue to earn even more interest—that’s compound interest.

Our Future Savings Calculator is an easy way to get an idea of how your savings can grow over time with compounding. All you have to do is put in how much you’ve already saved, how much you’ll contribute every month, and how many years until college. Use the Future Savings Calculator


Saving now means less student debt later

According to How America Pays for College 2016, parents with a plan to pay for college saved 3½ times more than non-planners. And students with a plan borrowed one-third less than non-planners.

By creating a college savings plan, you can make a difference in the amount of student loan debt that your student will face after graduation. Don’t worry about having to save the entire amount. Most families use a combination of savings and borrowing (along with scholarships and financial aid) to pay college bills for tuition, room and board, books and other expenses.

The benefit of saving vs. borrowing

The more you save, the less you—and your student—will have to borrow. And since borrowing comes with interest that accrues (grows), a loan will always cost your student—or you—more than using money you’ve saved.

If you’re more than two years from college, you can see the impact of saving. Check out the “Save vs. Borrow” section of the College Planning CalculatorSM.

Register for the College Planning Calculator