The College Board has released college cost figures for the 2016/2017 college cost data in its annual Trends in College Pricing report. “Total average cost” includes tuition and fees, room and board, books, transportation, and personal expenses. Here are the highlights:

Public colleges (in-state students):

• Tuition and fees increased an average of 2.4% to $9,650
• Room and board increased an average of 2.9% to $10,440
• Total average cost for 2016/2017: $24,610 (up from $24,061 in 2015/2016)

Public colleges (out-of-state students):

• Tuition and fees increased an average of 3.6% to $24,930
• Room and board increased an average of 2.9% to $10,440
• Total average cost for 2016/2017: $39,890 (up from $38,544 in 2015/2016)

Private colleges:

• Tuition and fees increased an average of 3.6% to $33,480
• Room and board increased an average of 3.0% to $11,890

Total average cost for 2016/2017: $49,320 (up from $47,831 in 2015/2016)

Link to “Trends in College Pricing 2016” https://trends.collegeboard.org/sites/default/files/2016-trends-college-pricing-web_0.pdf

College costs are a major expense. Understanding the current cost will help to plan how to meet the costs in the future. The information can also be helpful to grandparents in their gift planning.

One way to fund college expenses is to use a  “529” plan. These are offered by state or educational institutions. Earnings are not subject to federal tax and generally are not subject to state tax when used for “qualified education expenses” of the “designated beneficiary”. Some states offer tax incentives for state residents that  contribution to the plans in their states.

Not everyone should use a 529 plan.  Review the alternatives, benefits and drawbacks to determine if 529 plans should be part of your planning.