September is National College Savings Month, and Professor Pig has a few simple tips to help you manage the ever-rising cost of tuition..
A recent study published by Sallie Mae® in conjunction with IPSOS reveals interesting statistics on how Americans pay for college. According to the survey, 6 in10 parents are actively saving for college, and savings are at the highest level since 2013 at an average of $18,135.
The majority of those polled (30%) are utilizing 529 plans. The variety of 529 plans and the amount of information published on them can be overwhelming. Simply put, a 529 plan is a college saving or prepaid tuition plan that provides tax and financial aid benefits such as 5-year gift tax averaging and tax-free qualified distributions. Plan funds are used to pay for college expenses at any qualified college nationwide.
College savings plans invest your after-tax dollars in mutual funds or similar investment accounts. As a result, your balance will fluctuate with market performance. Prepaid tuition plans allow you to pre-pay all or a portion of the costs of an in-state education at a public college but converting the funds for private or out-of-state colleges is also an option.
With specific information for all 50 states, Savingforcollege.com is a great place to help identify the best 529 plan for your family, then track and grow your child’s college savings.
Now that you’ve got a basic understanding of college savings plans, it’s time to leverage some of the tools that help families develop their saving strategy.
According to GiftofCollege.com, a child is seven times more likely to attend college simply as a result of having a college savings account in their name. This organization helps make education affordable with a gift registry for college savings and student loans. Simply register your child, link their account to a new or existing college savings plan, and invite friends and family members to contribute via secure online transactions or by purchasing gift cards from select retailers.
Upromise helps families keep the promise of a college education with simple ways to make saving easier. Their tools accelerate your savings and track progress towards your college savings goals. They even reward you with bonuses along the way! Upromise credit cardholders and program members who shop at select online vendors and dine at eligible restaurants earn cashback, which can be deposited directly into a Upromise account or 529 College Savings Plan. After college, remaining funds can be used to reduce student loan payments.
Sallie Mae offers tools and calculators to help you plan and pay for college. Whether you are searching for scholarships and important deadlines, creating a college financial plan and budget, calculating student loan payments or the cost of unpaid interest, they have the worksheets, checklists, and calculators to get the job done!
9 in 10 parents are optimistic about meeting their savings goals, and now you can be one of them! Beyond the tools listed above, be sure you schedule regular deposits into your college saving fund and consider a reduction in household and personal purchases where possible. If you follow Professor Pig’s simple tips for saving for college, your child’s future will be bright!