FIRST, THE BAD NEWS: If you have dreams of sending your newborn child to Harvard, you'll have to raise a small fortune to foot the bill. Now, the good news: Thanks to the emergence of 529 plans, saving for college is easier than ever. (And, thankfully, most schools don't come with the hefty price tag of the tony Ivy league.) Of course, even with a 529 plan's tax-free savings, you're going to have to come up with an investment plan early — and stick to it for many, many years. Our worksheet will help you do it. Based on how much you've already saved, the rate you expect your savings to grow and how quickly you expect college costs to rise, we'll tell you how much you should be socking away on a monthly basis. Be warned: The figure may frighten you. But before the panic truly sets in, realize that if you do come up short, there are ways to fill in the gap, like student loans. This calculator assumes your college-savings fund is invested in a 529 college-savings plan — not a prepaid-tuition plan. We believe 529 plans are the best way to save for college, since they offer tax-free withdrawals when funds are used for qualified higher education expenses.* This means that while you have to save a staggering amount, it's still significantly less than you'd need to save in a taxable account. Earnings on withdrawals from Section 529 Plans not used for qualified expenses are subject to income taxes at the distributee's rate, plus a 10% federal income tax penalty. State tax treatment of Section 529 Plans varies. Out-of-state residents may not have the same state tax benefits as those plans offered to instate residents. You should consider, before investing, whether you or your designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's 529 college savings plan. The tax free treatment of 529 plans is scheduled to expire after 2010 unless Congress acts to extend or make the provision permanent. It is possible to lose money by investing in securities. *Earnings on fund withdrawals not used for qualified higher education expenses are subject to income tax and an additional 10% federal tax penalty. You may wish to consult with your tax advisor.

Worksheet

Investors should consider the investment objectives, risks, and charges and expenses associated with municipal fund securities before investing. More information about municipal securities is available in the issuer's statement. The official statement should be read carefully before investing.