Let’s face it, saving for college can feel overwhelming at times. You probably have concerns about the rising cost of college and the impact of student loan debt. You may wonder about the best financial tools to help.
Don’t worry…you’re not alone. Thousands of families grapple with these questions. That’s why the College Savings Plans Network (CSPN) established September as College Savings Month, which is dedicated to the importance of saving for higher education.
In honor of College Savings Month, we have assembled seven college savings tips.
- Open a 529 Account – A 529 college savings plan is a tax-advantaged investment plan designed to help families prepare for future higher education expenses. Many state-run plans offer tax benefits for residents as well as tax-free withdrawals when used for qualified higher-education expenses like tuition, living expenses, books, computers and more. Funds can be used at universities, colleges, technical colleges, or professional schools nationwide as well as many abroad.
- Start Early – We opened 529 accounts for our two kids when they were born. We made small contributions in the early stages and increased our contributions over time. The advantage of saving early is that your money has time to grow.
- Gifting – Make saving for college a family affair by asking friends and family to contribute to your child’s 529 account. Gifting is perfect for birthdays, holidays, and other special occasions, so ditch the latest toy or video game and give a gift that will last a lifetime.
- Student Funding – Ask your future college student to contribute too. Even a small amount of savings from a summer job can create a shared sense of responsibility and better appreciation of the sacrifices being made to fund their higher education.
- Employer Match – Check with your employer to see if they offer any 529 benefits. More employers are starting to add 529 contributions or matching contributions to their benefits suite to help attract and retain employees.
- College Credit – In my home state of Wisconsin, many high schools offer the opportunity to earn college credits through the technical college system, university system and independent private colleges. Earning college credits in high school can shorten the time it takes to earn an undergraduate degree, which ultimately saves money.
- Student Loan Debt – One in four Americans have student loan debt and the average debt among 2019 graduates is just over $37,000*. Consider student loan debt very carefully when it comes to funding college. You don’t want to burden your child with excessive debt as they start their professional life.
In addition, you don’t want to pay for your kids’ education at the expense of your overall financial wellness. Saving for your own retirement or maintaining a rainy-day fund are important as well.
Follow these steps and you will be well on your way to achieving your college savings goals.
About the author:
Linda Lambert is the Financial Capability Director for the Wisconsin 529 College Savings Program at the Wisconsin Department of Financial Institutions (DFI).
*Source: nitro.com https://www.nitrocollege.com/research/average-student-loan-debt