Saving for College...Essential Ideas as published in InsideNova.com
It’s a given that every parent wants their children to start with a college education. But, golly, college is expensive. According to the College Board, all-in costs for the 2016–2017 academic year is approaching $25,000 at a four-year in-state public college, and $50,000 at a four-year private institution.1
Clearly, there’s no time to waste in saving for your kids’ high-cost higher education. If I get one thing across, that’s it. But I don’t blame you if you’re wondering where to even begin. Don’t despair! Let’s roll up our sleeves and get practical.
Make some plans. Especially if you start saving as early as you should, nothing’s for sure. But you’ve got to start somewhere, right? Set specific (if imperfect) “best guess” goals. Public or private schooling? Associate degree or PhD? Dorm life, commuting from home or online courses?
Calculate the costs. Next, visit a resource like money.cnn.com/tools/collegecost/collegecost.html and start crunching some realistic numbers based on those plans you’ve made. With a total cost in mind, here’s a handy tool to assess your annual savings targets: http://apps.finra.org/Calcs/1/CollegeSavings.
Start (or keep) saving. There are four different tax-advantaged ways to save for college: 529 plans, Coverdell education savings accounts, Series EE and I US savings bonds, and UTMA/UGMA accounts. You can use any one of these or a combination – but in my next piece, I’ll expand on the 529 plan as often the best tool for the job.
Rinse and repeat. When your child moves toward adulthood, your early plans will probably shift. Revisit things annually, and adjust as needed. As your offspring matures, involve them in the deliberations – and saving efforts – to help you both chart a more realistic course.
As I mentioned above, there are a number of directions you can take for your college savings. My investment vehicle of choice is often the 529 plan. Next, I’ll explain why, and offer some navigation tips to consider.
1 1The College Board, Trends in College Pricing 2016. https://trends.collegeboard.org/