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The difference costs can make

Don't ignore the price of investing. High costs can make a huge impact on how much you have left to pay for college.

What you're paying for

Investment costs, which pay for the management of the plan and its investments, are measured in small percentages known as expense ratios. Even a seemingly small expense ratio can make a big dent in your savings.

Let's say you have $10,000 to invest in your newborn's college fund and you're choosing between two 529 plans. In the first plan, the investment you're interested in has an expense ratio of 0.47%, which is the industry average.* A similar investment in The Vanguard 529 Plan has an expense ratio of 0.16%.

Such a small difference couldn't matter that much in the long run, right?

Well, in year one, you'd pay $47 for your investment in the first plan, versus $16 in The Vanguard Plan. So your balance at the end of the year would be $31 higher in The Vanguard Plan, all else being equal.

But wait—that's not the end of it. The $31 that you didn't pay in expenses to Vanguard will keep earning returns over the next 17 years. In fact, by the time you're ready to use your college savings, that $31 could actually be worth $88.

And remember, this scenario will keep playing out every year that you have money in your account. Put it altogether, and that 0.47% expense ratio could knock $1,425 off your final balance. That number drops to $500 with The Vanguard Plan—less than half the price. That's an additional $925 your child can use for college.

The moral of the story is: Don't let costs erode your savings.

You could keep more money for college by choosing Vanguard

Bar chart depicting how much more you could be paying with a 0.53% expense ratio versus one that is 0.19%.

This hypothetical illustration assumes an average annual 6% return over 18 years and does not represent any particular investment nor does it account for inflation. "What you lose to costs" represents both the amount paid in expenses as well as the "opportunity costs"—the amount you lose because the costs you paid are no longer invested. There may be other material differences between investment products that must be considered prior to investing. Numbers are rounded.

The Vanguard 529 cost advantage

Our costs are among the lowest in the industry. Since our plan was introduced in 2002, we've cut our expenses 9 times. Because we stay focused on reducing your investment costs, more of your money can stay in your account—working toward your goals.

Expense ratios for The Vanguard 529 Plan portfolios:

  • Age-based portfolios: 0.16%.
  • Individual portfolios: 0.16%–0.44%.

Fees you won't pay at Vanguard:

  • Enrollment fees.
  • Transfer fees.
  • Commissions.

The Vanguard 529 College Savings Plan is a Nevada Trust administered by the Board of Trustees of the College Savings Plans of Nevada, chaired by the Nevada State Treasurer.

Open a Vanguard 529 Plan

We're here to help

Talk with one of our education savings specialists.

Call 866-734-4533

Monday through Friday
8 a.m. to 9 p.m., Eastern time

REFERENCE CONTENT

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Expense ratio

Fees charged to investors to cover operating costs, expressed as a percentage. The money is deducted from investment returns before they're given to investors. For example, if you had $10,000 invested in a portfolio with an expense ratio of 0.20%, you'd pay about $20 a year out of your investment returns.