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529 College Plans

Invest now or borrow later?

Borrowing money is one way to pay for college. But if you begin investing now in a college savings account, you'll have the opportunity to grow your investments instead of paying interest on a loan. Investing ahead of time can cost you a lot less than borrowing.

Invest Now or Borrow Later? 1

Projected cost of a public 4-year college = $196,716 2

A $142,641 difference

years


Savings example assumed a 7% annualized rate of return with contributions made at the beginning of each period. Your actual rate of return can vary widely over time, especially for long-term investments. This includes the possible loss of principal on your investment. This hypothetical example is for illustrative purposes only and not representative of a particular investment. Investment fees, expenses and taxes would lower the savings amount and increase the cost shown.

Important Legal Information

Each plan account is subject to an annual program management fee of 0.25% of assets and underlying fund expenses, currently up to 0.97% of assets, which may vary, and sales loads and annual and deferred sales charges, which vary by class of shares. See the Investor Handbook for more complete information. These expenses are not reflected in the illustration; if they had been, results shown would be lower.

Tax benefits are conditioned on meeting certain requirements. Federal income tax, a 10% federal tax penalty, and state income tax and penalties may 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 529 Investor Handbook for more complete information.

Investors should carefully consider plan investment goals, risks, charges and expenses before investing. To obtain an Investor Handbook, which contains this and other information, talk to your financial advisor, go to the Order 529 Literature section on this website, or call Franklin Templeton Distributors, Inc., the manager and underwriter for the plan, at (800) 818-4030. 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 only available for investments in its qualified tuition program.

Footnotes

  1. Source: SallieMae. The borrowing example assumes a fixed interest rate of 3.86% based on a subsidized Stafford loan issued between 7/1/2013-6/30/2014. Assumed payments are made at the beginning of each period. Examples are for illustrative purposes only, and are not representative of any particular investment. Investments do not guarantee any specific rate of return, and you may have a gain or a loss on the amounts invested. Periodic investing plans do not assure a profit and do not protect against loss in a declining market.

  2. Source: The College Board, Trends in College Pricing, 2013. Projected cost upon child's entrance to college for four years at a public or private college. Figures are based upon the 5.73% and 4.62% 10-year average annual increase in public and private college costs, as reported by The College Board for the 2013-14.


A college education is expensive.

The cost of a college education is increasing, but planning in advance can help you prepare to send your child to college. College education expenses have climbed nearly 6% annually during the past 10 years, more than triple our nation's inflation rate. That means a child born today could need over $340,000 to attend a four-year public college in 2032-33, or about triple today's college costs.2

Compare expected college costs

years

Important Legal Information

Each plan account is subject to an annual program management fee of 0.25% of assets and underlying fund expenses, currently up to 0.97% of assets, which may vary, and sales loads and annual and deferred sales charges, which vary by class of shares. See the Investor Handbook for more complete information. These expenses are not reflected in the illustration; if they had been, results shown would be lower.

Tax benefits are conditioned on meeting certain requirements. Federal income tax, a 10% federal tax penalty, and state income tax and penalties may 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 529 Investor Handbook for more complete information.

Investors should carefully consider plan investment goals, risks, charges and expenses before investing. To obtain an Investor Handbook, which contains this and other information, talk to your financial advisor, go to the Order 529 Literature section on this website, or call Franklin Templeton Distributors, Inc., the manager and underwriter for the plan, at (800) 818-4030. 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 only available for investments in its qualified tuition program.

Footnotes

  1. Source: SallieMae. The borrowing example assumes a fixed interest rate of 3.86% based on a subsidized Stafford loan issued between 7/1/2013-6/30/2014. Assumed payments are made at the beginning of each period. Examples are for illustrative purposes only, and are not representative of any particular investment. Investments do not guarantee any specific rate of return, and you may have a gain or a loss on the amounts invested. Periodic investing plans do not assure a profit and do not protect against loss in a declining market.

  2. Source: The College Board, Trends in College Pricing, 2013. Projected cost upon child's entrance to college for four years at a public or private college. Figures are based upon the 5.73% and 4.62% 10-year average annual increase in public and private college costs, as reported by The College Board for the 2013-14.

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    For US residents only.