Currently, annual college expenses are running at $30,000, and are expected to grow at an annual rate of 5%. Their child is expected to enter college when she turns 18, and complete the degree program in 5 years. Your clients expect their child to be responsible for 20% of college expenses via the work-study program. All annual college expenses are due at the beginning of each year. Your clients plan to tap into the 529 Plan account for paying their child’s college expenses.
Is there sufficient funding in the 529 account for financing their child’s college expenses? If not, when will the funding run out of money? Support your answers numerically.