March 9, 2020
Tips to Start Saving for College
Make plans to start saving for your kids’ education early.
As the cost of attending college continues to rise, there are different options for setting some money aside now to grow a college fund for later. With the average college graduate leaving with over $37,000 in student loan debt, any college savings can help.
Understand the costs of college.
Costs for tuition, living expenses and supplies are on the rise. Figuring out how much college is going to cost depends on the school chosen and financial aid and scholarships awarded. To get a good idea, start comparing public, private and community colleges both in- and out-of-state. With an expected cost, you can estimate how much you need to save based on your budget and timeframe.
Start saving early.
As with every financial goal, saving now can pay off later. Setting aside a little can make a big difference in helping pay for college and reduce the amount needed to borrow in student loans. Every dollar saved is one less you may need to repay with interest.
Consider a 529 plan.
Also known as a qualified tuition plan, a 529 plan allows you to save for future education expenses without having to pay taxes on its growth. Sponsored by state governments, agencies or educational institutions, as long as the money is taken out for qualified higher-education expenses, it will not be taxed. Work with a personal banker to find the right 529 plan to take advantage of tax deductions on your contributions.
Balance college savings with other financial goals.
Investing in your kids’ education is a goal that should be set with other priorities, like retirement. Instead of tapping into your nest egg to cover tuition, consider all funding sources to avoid jeopardizing your own financial wellbeing.
Do your research.
There are many options to help pay for college. Research government-sponsored, need-based financial aid programs, school- or major-specific scholarships and other options offered. Sometimes due to large alumni networks, more expensive private universities can offer more in financial aid and scholarships making it less expensive than public universities.
It’s best to begin saving for your children’s education as soon as possible. Drop by your local branch and meet with a personal banker to learn about different options for saving and what works best within your budget.
