Archived Information

Reauthorization of the Higher Education Act

A Family That Saves Can Be Required to Contribute Nearly Twice as Much to Their Children's Education as a Family That Doesn't

The following table shows the expected family contribution for college of a typical family that has two children, has earnings of $40,000 annually -- roughly equal to median family income for all U. S. families -- and has saved 5% of its income each year for twenty years. It then compares this to the contribution for an identical family which did not save for its children's education.

Expected Family Contributions Over Eight Years

Under the current methodology for determining family contributions:

• The family that responsibly saved for its children's education is expected to contribute $16,000 more over eight years than a family with the same income but did not save,

• Stated differently, the responsible family is expected to contribute nearly twice as much as a family with the same income but that did not save.

-###-

Return to Assets page