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Paying For College - Head Matters


3. Saving

One of the best ways to save on college expenses is to plan for them early. The cost of college has grown quickly in recent years and is expected to keep growing. Planning and saving for college are the best ways to be prepared for the rising cost of higher education.

Saving for college is also much, much less expensive than borrowing for college. Our chart below* illustrates this by looking at the cost of investing money toward a goal of $25,000 over 10 years vs. borrowing $25,000 and paying it back over 10 years. ($25,000 is currently an average amount of student debt for a college graduate). And keep in mind, if you aren’t able to save $25,000 or the full amount that you’ll need for college, or you don’t have 10 years to save, it’s most important to make a habit of saving any amount that you can toward your education goal.

Saving for college is also important because it sets up an expectation of college. By saving for higher education, you are showing your family or yourself that you are going to college. Making that plan ahead of time can be a very powerful motivator.

There are many things to think about as you plan to save for your or your family’s education.

*This hypothetical illustration represents the effects of compounding assets monthly assuming an annual pre-tax rate of return of 6% and the cost of borrowing at 6.8%. It does not reflect an actual investment or any taxes payable upon withdrawal.  A period investment does not assure a profit or protect against a loss in declining markets. All results assume no withdrawals are made and do not reflect any taxes or penalties that may be due upon distribution.  These hypothetical illustrations do not represent any particular investments.  Your investments will vary and may perform better or worse than these examples, which are for illustration purposes only.

Important Considerations
To learn about CollegeInvest’s 529 program, its objectives, risks, charges, expenses, limitations, restrictions and qualifications regarding the Plans’ benefits and potential tax advantages, please read and consider carefully the Program Disclosure Statements (PDS) available at before investing.  Also, check with your or your beneficiary’s home state to learn if it offers tax or other benefits from investing in its own plan.
Investments are not guaranteed by CollegeInvest, the State of Colorado, its agencies and may lose value, including principal amount invested.
Administered and issues by CollegeInvest. CollegeInvest and the CollegeInvest logo are registered trademarks of CollegeInvest. Copyright © 2012 CollegeInvest

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