Saving vs. borrowing
When it comes to paying for higher education, should you save, or borrow?
Meet Sue. When Sue was born, her family started investing in a 529 college savings account.
Sue's family contributed $100 a month for 18 years, for a total of $21,600.
With a 5% annual rate of return, their account earned an additional $13,400—for a total of $35,000, that Sue can use for qualified higher-education expenses like tuition, room and board, and school supplies.
Meet Brian. Brian is 18 years old, and he's borrowing some of the money he needs to pay for college. Brian is getting a private student loan for $35,000, with a 7% annual interest rate.
If Brian pays off his loan making monthly payments of $406, for 10 years, his $35,000 loan will cost him over $48,000.
Both Sue and Brian have $35,000 to put toward their education. Here's what's different:
- Sue's out-of-pocket cost is $21,600.
- Brian's out-of-pocket cost is $48,720.
You can't put a price tag on the educational experiences Sue and Brian will have—but you can see the value of saving versus borrowing.
While it may not be possible for you to save as much as Sue's family, any amount you save will help to offset the amount your child has to borrow.
Save now, so the only things that stay with your child after graduation are lessons learned and memories made—not debt.
If you are not a Missouri taxpayer, consider before investing whether your or the designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program.
The Missouri Higher Education Savings Program (the "Program Trust") is a trust created by the State of Missouri. When you invest in MOST—Missouri's 529 College Savings Plan (the "Plan"), you are purchasing portfolio units issued by the Program Trust. Portfolio units are municipal securities. The Plan has been implemented and is administered by the Missouri Higher Education Savings Program Board (the "Board"). Ascensus Broker Dealer Services, Inc., and Ascensus Investment Advisors, LLC, serve as the Program Manager and Recordkeeping and Servicing Agent, respectively, with overall responsibility for the day-to-day operations. The Vanguard Group, Inc., serves as Investment Manager for the Plan. Vanguard Marketing Corporation, an affiliate of The Vanguard Group, Inc., markets and distributes the Plan. The Plan's portfolios, although they invest in mutual funds, are not mutual funds.
Investment returns are not guaranteed, and you could lose money by investing in the Plan. Participants assume all investment risks, including the potential for loss of principal, as well as responsibility for any federal and state tax consequences.
Upromise and the Upromise logo are registered service marks of Upromise, Inc. Vanguard and the ship logo are trademarks of The Vanguard Group, Inc. Ugift is a registered service mark of Ascensus Broker Dealer Services, Inc.© 2015 State of Missouri.