Studious Solutions policies offer a low cost plan for college savings compared to 529 plans or traditional saving for your child’s education.
As an example, we will consider a child going into Kindergarten in December 2023. We will assume we need to pay for six years of college. Contrary to the name, students regularly take up to six years to complete a 4-year degree program. We will also assume that parents stop contributing to the Studious or 529 plan on September 1st of the year the child goes to college.
Studious Solutions Policy Example
A Studious policy assumes the expected amount of debt for this student to be $53,834.15 or less. A Studious policy will offer coverage up to this amount for $60.36 a month.
529 Plan Cost Example
Online tools tend to use a generous 7% growth rate for 529 plans. With a growth rate of 7% annually, the expected monthly payment to reach $53,834.15 is a whopping $200.12 a month. More than 3 times the cost of a Studious policy!
Try both!
The Studious recommended policy for this student would actually be $32.85 a month for $26,917.08 in coverage because we expect your child will not need to take out a loan for every penny they need. For struggling families, we even offer lower cost plans that cover students just as well for the first year of school! The first year is the most likely time for a student to drop out. We can offer substantial coverage at a fraction of the price by focusing on the first year. The recommended 1-year policy for this student would only be $15.63 a month!
Ideally, you will combine these two plans for college, a 529 plan and a Studious policy to build up your child’s future. We discuss this idea more in another blog post.
The rate of return on a 529 plan will not be guaranteed either, so that $200.12 a month may not actually get you to your target balance. With that said, a Studious policy and a 529 plan do not need to compete. Roughly 45% of the cost of college is paid by the parents. The remaining 55% may come from scholarships or student loans. A student who does not finish their degree can end up with more debt than the entire amount you saved for their tuition over many years! A Studious policy can cover that 55% to keep your child from crushing debt.
Consider opening a Studious Solutions policy to to protect your child’s future!
