Saving for College in Tough TimesAcross the country, families are making every hard-earned dollar count. But even as belts tighten, making a child’s education a priority has never been more important. The benefits of college can be significant: The College Board’s 2007 report, “Education Pays,” found that a typical bachelor’s degree can mean increased earnings of more than 60 percent. That translates into $800,000 more, on average over a 40-year working lifetime, than the typical high-school graduate will earn. In today’s economy, many families might not be able to save much for college. However, taking a pro-active approach of saving over time will eventually add up. “Modest contributions may not seem like much,” says Liz Robinson, vice president at Upromise Investments, “but every penny counts when it comes to saving for college.” Here are three ways to “save smart” for college: 1. Save in the right place. A number of investment accounts make sense for college savings; 529 college savings plans, for example, were designed specifically for this purpose. There are state-sponsored 529 plans that offer federal, and in some instances state, tax advantages. Although families are not required to invest in their home state’s plan, they should consider them before investing. 2. Start early. Parents of teenagers already know this, but college comes in the blink of an eye. It’s relatively easy to set up a 529 account -; it can take about 10 minutes to get signed up and activate an account using a plan’s Web site. 3. Don’t go it alone. Inviting family and friends to contribute to a child’s 529 plan is a great way to boost your savings. And, with new online tools, it can be done simply and securely. Ugift, for example, is a service offered with certain 529 plans that lets account owners invite family and friends to mark celebrations with gift contributions to a child’s 529 plan account in place of traditional gifts. For more information on 529 college savings plans and Ugift, visit www.529.com.
Resources for College Saving
- The College Savings Plans Network
- 529 Savings Plan Resources
- U.S. Securities and Exchange Commission - Official Government Site Explaining 529 Savings
- Student Aid.gov - How and when to start preparing for college from both home-schooling & traditional setting points of view.