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To save or to borrow?

Comparing two ways to pay for college could save you money.


By investing to help pay for a loved one’s college education, you’re reducing the long-term financial burden of student-loan debt. But paying for college with assets you invest over time rather than dollars you’ll borrow also has the potential to save you money in the long run. Here’s why:


Student loans: A growing reality

Rising college costs mean loans will be a reality for many students. By reducing a loved one’s student loan burden, you’ll be helping them get on firmer financial footing as a young adult. Consider these sobering facts:

  • Two-thirds of college seniors in 2010 graduated with student-loan debt. The average amount was $25,250.2
  • 34% of families paying for college took out student loans in 2010, up from 25% in 2009.3

1 For illustrative purposes only. Not intended to portray an actual investment.

2 The Project on Student Debt, Student Debt and the Class of 2010 (2011)

3 Sallie Mae, How America Pays for College (2011)

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Depending on your state of residence, there may be an in-state plan that provides tax and other benefits not available through CollegeAmerica. Before investing in any state’s 529 plan, you should consult your tax adviser.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses, summary prospectuses and CollegeAmerica Program Description, which can be obtained from a financial professional and should be read carefully before investing. CollegeAmerica is distributed by American Funds Distributors® and sold through unaffiliated intermediaries.