Saving for College in 8 Simple Ways
As a parent, you’ve probably wondered—and worried—about the rising cost of a college education, but have you thought about the cost of not going to college? Consider that, according to the College Board’s Education Pays report, the typical bachelor’s degree recipient earns approximately 66% more during a 40-year working life than the typical high school graduate. Those with some college also fare better, with 17% higher income levels.
It’s clear that by encouraging the pursuit of higher education, you can help your child improve his or her earning power. And by saving now, you can also help with the cost. In recognition of College Savings Month, here are some savings tips and strategies inspired by FinAid.org, plus a wealth of other resources to make stashing money for college easier and more effective.
- Start saving early. If you didn’t start the moment your child was born, start today.
- Establish a special account designated for college. You may want to consider the qualified tuition programs, commonly known as “529 plans,” developed by federal and state lawmakers to make higher education financially accessible to more Americans. Here are some resources to help you learn more about the various options for college savings:
- See the U.S. Securities and Exchange Commission’s answers to common questions about 529 plans.
- Get a checklist of questions to ask when selecting a college savings plan.
- Download a brochure on understanding 529 plans.
- Find information about your state’s plan.
- Compare popular ways to save for college.
- Learn about other college savings options.
- Even when money is tight, continue to save, just in smaller amounts—it will add up!
- Save something from every paycheck.
- Make saving automatic by setting up a regular payroll deduction or bank account transfer.
- Establish a goal so you can measure your progress. Try an easy college-cost calculator to help you estimate how much you’ll need for your child’s higher education.
- Save and invest monetary gifts from grandparents and relatives; ask them to contribute directly to your child’s college savings account.
- Save “found money.” If you can, increase the amount of money you save when you get a raise. If you should get a windfall, such as an inheritance, an income tax refund, or a bonus at work, put it in the college savings fund. If you pay off a bill or reduce a household expense, try shifting the amount you previously paid into college savings.
To learn more about preparing and saving for your child’s college education, try these links:
- We put together a list of recommended college planning resources that can help parents of juniors and seniors in high school with the college search process.
- Discover a variety of college-related resources from U.S. government agencies, including information on federal and state financial aid sources, scholarship information, and tips for avoiding college loan scams.
- Federal Student Aid, part of the U.S. Department of Education, offers information on preparing for college, finding the right school, and locating funding sources, including grants, scholarships, loans, and work-study.
Though college savings can seem overwhelming, don’t despair! College advice and financial aid information are readily available online and through your child’s school counselor. And by breaking the process down into simple steps and following these savings strategies, you can enhance your ability to assist your child with education expenses.
What simple or creative methods have you discovered that helped you increase your savings? Share your most effective ideas in the comments.