With the cost of a college education rising quicker than the inflation, determining how to save for college can be quite a chore. However, college is the best investment that can be made—individuals with college degrees make twice as much, on average, than those with just high school diplomas. So, the perilous road towards saving for college must be taken. Check out the following ideas to make saving for college a little bit simpler for you:
Where to Save
Some people prefer saving their money in bank accounts as opposed to stocks. With bank accounts, though there are no tax breaks, you can be sure that your funds will not be lost. Plus, over time your savings will, slowly but surely, increase.
Set up a 529 College Savings Plan
A 529 Plan is a popular state- or educational institution-run savings plan set up to aid families in setting aside college funds for the future. 529 Plans are available in almost every U.S. state, though it is up to the state whether or not it will offer a 529 Plan and these plans vary from state to state. These plans are extremely helpful, as they offer tax-free growth on investment. As long as the funds are used on for tuition, room and board, and other related expenses, there are no federal taxes on the withdrawal. Contributions to the 529 College Savings Plan is tax-deductible in many states. This plan is an easy, smart way to start saving for college.
Have automatic deposits made from your paycheck into your college savings account or your 529 college savings plan. This way your periodic contributions won’t be skipped and your money will be safely accumulated.
Little Ways to Save
Encourage your family and relatives to contribute to your college funds instead of buying you gifts on holidays and birthdays. Though it may seem trivial, the money will steadily collect and be of great help to you. Note that you can get a tax break by donating to an in-state 529 Plan. If you are already on a tight budget and surviving paycheck to paycheck, see where you can cut costs in your monthly expenses. For example, are you eating out frequently, paying for an unused gym membership, etc.? Little contributions to your savings make a big difference in the long run.
Aid from Schools
Don’t rely entirely on yourself to save up all the money that seems to be required. Contact the schools you are looking at and learn more about their financial aid programs. Several private colleges offer grants which could cut down your tuition significantly—to levels even lower than a public university, often times. Also, learn more about various scholarships available. You’ll be surprised to see how many scholarships are offered and the variety that they come in. Find a few scholarships that you might be interested in, or which suit your strengths. Even if you suspect that you may be able to get by without a scholarship, apply anyway, especially if you have a special skill or talent that you can cash in on—literally. There’s no harm done in applying, and if you do receive the scholarship, all the better.
- Several organizations including AmeriCorps, Peace Corp, and National Health Services Corps will, in exchange for a service commitment, give you college money.
- Apply to several schools. This way, the chances are you’ll get into more than one, which means it is more likely that you may receive a hefty financial aid package.
- Talk to your guidance counselor. They are there to assist you in the college application process and their expertise may aid you in figuring out how to fund for college. Of course, their advice is free, so make the best of it.