How much should I save?

The following chart estimates how much you might need to save each month for 18 years to cover tuition.

Assumes annual tuition inflation projections for: Community Colleges, 3.5%; State System of Higher Education, 4.5%; State-Related Universities, 6.53%; Private Four-Year Colleges, 5.75%; and Ivy League Colleges, 5.75%.  Assumes account maintenance fees are paid separately.  Although these projections are based on historical and projected rates of tuition inflation at each type of institution, there can be no assurance that they will accurately reflect future increases.  Projected tuition rates do not represent actual tuition costs at a specific school.  Assumes contributions equal to 60 GSP Credits at the Community College Average Tuition Level and 96 GSP Credits for all other Tuition Levels.  Contributions start in September 2009 and monthly contributions continue through August 2027. Monthly contributions needed to cover other time periods will vary.  Calculations provided by Actuarial Resources Corporation.

Additional GSP contributions would be needed to cover other qualified expenses, such as mandatory fees, room and board, or books.  While few people can save enough to cover the entire cost of college, whatever you save now will reduce what you have to pay or borrow later.

Know if you’re saving enough
The GSP helps you know how much you need to save and how close you are to your goal by having you choose a tuition level when you enroll. You may choose from a wide range of levels that correspond to the type of school that you want to save for. 
Most GSP participants pick one of the following average tuition levels:

• PA Community Colleges Average, based on Pennsylvania’s 14 community colleges.
• PA State System of Higher Education Average, based on 14 universities that comprise the State System of Higher Education.
• PA State-Related Universities Average, based on the University of Pittsburgh, Pennsylvania State University (including the Pennsylvania College of Technology), Temple University, and Lincoln University.
• Private Four-Year College Average, based on private four-year colleges.
• Ivy League School Average, based on the eight Ivy League schools, including the University of Pennsylvania.

Or, if you or your child has an eye on a specific Pennsylvania publicly funded school, you may choose to save at that particular institution’s tuition level.

You can change the tuition level at any time, and the change will be made retroactively for each contribution made to the account.  Your tuition level also determines your earnings rate.  When used for qualified expenses, the value of your account will have increased at the same rate as tuition increased at your selected tuition level.

Each contribution you make to your account is converted into GSP credits at the Tuition Level you select. For example, suppose you contributed $1,500 to your GSP account in the fall of 2009 at the average Tuition Level for State-Related Schools.  At the time, the rate for one GSP credit at that level was $587.  So your $1,500 contribution would give you 2.55 GSP credits.

Each time you make a contribution, the amount of your contribution is divided by the GSP credit rate at the Tuition Level you chose, and the number of GSP credits accumulates.  For most four-year colleges, 96 GSP credits will cover four years of tuition; for community colleges, you generally would need 60 GSP credits for an Associate’s Degree.

Keep up with rising tuition costs
Other lower-risk savings options, such as bank savings accounts or certificates of deposit (CDs), might not provide enough return to match the rising cost of tuition.  Other types of investments that have greater return potential usually come with a lot more risk.  The GSP is lower-risk and guarantees that your savings keep up with tuition inflation.

The chart below highlights how saving at today’s rates in the GSP beats paying later or borrowing later.