It’s Never Too Early to Start Saving

Congratulations on your upcoming arrival! It's a time filled with love and joy for you and your family.

We know you're busy making preparations, visiting doctors, and learning all there is to know so you can decide what is right for your baby. That's why we've made it easy to help you start saving for college—even before your baby arrives. Although college may seem far away, opening a T. Rowe Price College Savings Plan account early puts the power of time and earnings potential, on your side.

Why Invest in a 529 Plan?

A 529 college savings plan is a simple, affordable way for families to put aside money for college tuition and education-related expenses as well as K-12 tuition expenses for public, private, and religious schools. The "529" refers to the section of the Internal Revenue Code that created these plans. 529 plans offer unique benefits that make them the smartest way to save for college. Those benefits include:

  • Tax–free earnings potential – Any earnings on your contributions are tax-free when used for qualified higher education expenses such as tuition, fees, room and board, books, supplies, computer technology, and equipment, making 529 plans a unique savings vehicle for college expenses. You can also use the assets for tuition expenses up to $10,000 per beneficiary per year across all accounts at K-12 public, private, or religious schools. Depending on your state of residence, families may have to pay state income taxes on K-12 distributions. Consult your tax professional.
  • Flexibility – You can use your savings at nearly any college in the U.S., including vocational and technical schools. You can now also use your 529 college savings plan for tuition expenses at K-12 public, private or religious schools. You do not need to use your state's 529 plan.
  • Access to your contributions at any time – It’s your money to use at any time for any reason. Your contributions to the plan are never taxed or penalized, and any earnings portion of a nonqualified distribution may be subject to federal and state income taxes, in addition to a 10% federal tax penalty.
  • Gifting – You have the added benefit of enrolling in the GoTuitionSM gifting portal. It's a convenient way for friends and family to give online gifts for baby showers and birth announcements.
  • Easy-to-use planning tools - The Education Planning Center is an online tool that makes it easy to see if you're on track with your savings goals and provides age-specific passports from birth to graduation, and information on financial aid, scholarships, and grants.

Right Now Is the Right Time to Start Saving

The sooner you start saving, the more you could potentially have for higher education expenses. It's that simple. The sooner you start investing, the longer you have for your savings to potentially grow. So put time on your side and start saving today.

The following chart illustrates how much a delay of just a couple of years could impact how much you have for college expenses when the time comes.

The earlier you save, the greater your growth potential.

You can start saving even before your baby arrives. In fact, opening an account today not only means you'll have one less thing to remember to do later, but it will give your investment more time to potentially grow. Plus, you have the flexibility to make changes to your account whenever you want.

* Chart assumes a hypothetical 6% rate of return compounded monthly. This chart is for illustrative purposes and does not represent the return of any specific investment option. Making automatic monthly contributions does not assure a profit or protect against loss during varying market conditions.