The cost of a college education has risen sharply over the years, and it looks like it’s going to continue to go up. Most parents understand the benefits of starting early to save for their children’s college years, but still struggle to put a savings plan in motion. With so many options to choose from, settling on any single plan can be an intimidating experience.
However, if you get the right tools and resources for starting a college savings plan, the process becomes much more straightforward. Here’s a look at essential resources for your college savings journey and tips to make the process painless easier.
Choosing the right college savings plan
Besides buying your first home, paying for a post-secondary education is one of the most significant additional expenses you incur during your lifetime. So, where do you even start?
One of the best and most reputable resources for parents of college-bound kids is SavingForCollege.Com. As a leading, independent authority on 529 education savings plans, the site provides in-depth, non-partisan resources for both parents and students.
What Sets SavingForCollege.Com apart?
It offers parents and students critical resources such as:
- Articles and how-to guides around college and college savings instruments, especially 529 education savings plans
- Resources covering state-specific college savings plan
- Data and information on possible tax advantages with each 529 college savings plan
- Details on FDIC-insured savings vehicles that offer an extra layer of protection from economic volatility
- Rankings on various college savings plans
This web resource simplifies choosing and starting a college savings plan. Using the site’s impartial metrics on college savings plans, parents and students can begin to unearth gems like the College Savings Bank, owned by a regional financial institution. CSB has ranked first for yield on the 3-year certificate of deposit and second for savings yields.
Protecting your college savings
It’s one thing saving for your kid’s college education; it’s a whole other game protecting those savings. As you consider different college savings options, look for FDIC-insured college savings products. Indeed, according to SavingForCollege.Com, close to 30 529 plans offer FDIC covered products.
With FDIC insurance, the first $250,000 of your hard-earned savings is protected by the FDIC. Even if your college savings financial institution fails, you still get a portion of your money up to the set limit.
Getting the most from your college savings plan
The best time to plant a tree was twenty years ago, the next best time? Now (according to a popular saying). For parents, saving early lets them enjoy the benefits of compounding. However, even without compound interest, taking other steps can add to your college savings. They include:
- Maxing out tax-deductible contributions every year
- Automating the savings plan
- Saving gifts and contributions from friends and family
- Diversifying college savings plan investments
Escaping the student loan debt trap
Student loan debt is the second most common debt, behind only consumer debt. The actual figure stood at $1.5 trillion in 2020, translating to an average of more than $29,200 for the class of 2018. That figure jumped to roughly $32,731 in 2020. Student loan debt cuts across demographics and age groups. Do you want to saddle your children with all that debt?
You need to plan and start saving early to comfortably afford post-secondary education when your college-aged kids decide to get an early college start.
Start saving for college now
The first college tuition payment comes as a shocker to most parents. It’s an eye-popping figure. As such, it’s never too early to start saving for your kid’s college education. Some parents start as early as when their child is born, or even earlier. Saving early not only creates financial discipline but also endows your college savings with the rewards of compound interest.