College Savings Tips for Families
- Make your money work. The sooner you start saving, the longer your money will have to grow. Saving for college is less expensive than borrowing for it. When you save, the money earns interest, when you borrow, you pay interest. So, let the money do the work!
- Establish a college saving goal. Project the cost of tuition by the time your child will start college and allocate a fixed percentage of income towards it. Don't try to save for the entire costs—use the one-third rule (one-third from current income, grants, and scholarship; one-third from loans; and one-third from savings).
- It's all in a name. Put college savings in your name not your child's. This will minimize the impact of the college savings fund when determining need-based financial aid.
- Account for college. Open a separate college savings account, like our CollegeSaverSM account. Seeing the account grow will motivate you to save. Be disciplined—this is for your child's education. Keep the money in the account until that first tuition bill arrives.
- Make it automatic. Sign up for payroll deduction or ask your bank to automatically move money from your checking account to your designated college savings fund account every month.
- Get financially fit. Pay off credit card balances and be smart about how and when you use them.
- Be wise about windfalls. If you receive extra money such as a large income tax refund, a bonus from work or an inheritance, put it in the college savings account.
- The 411 on the 529 college saving plan. The 529 Savings Plans are tax advantage plans that allow your money to grow in a tax-deferred fashion, and qualified withdrawals are exempt from Federal income tax. Many states will also exempt state taxes for 529 plans. Family and close friends can also sign up to contribute to 529 plans.
- Loyalty pays. Take advantage of loyalty programs that help you earn money to pay for college. These programs provide rebates to the consumer in exchange for buying certain brands, or shopping at a particular retailer. Typically, these programs provide a reward in the form of credits to a 529 plan.
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