Saving For College

 

Most parents should expect to pay at least half to two-thirds of their children's college costs through a combination of savings, current income, and loans. Gift aid from the government, the colleges and universities, and private scholarships accounts for only about a third of total college costs.

 

Accordingly, it is very important that parents start saving for their children's education as soon as possible, even as early as the day the child is born. Time is one of your most valuable assets. The sooner you start saving for college, the more time your money will have to grow.

 

If you start saving early enough, even a modest weekly or monthly investment can grow to a significant college fund by the time the child matriculates. For example, saving $50 a month from birth would yield about $20,000 by the time the child turns 17, assuming a 7% return on investment. Saving $200 a month would yield almost $80,000.

 

There are also several college savings calculators and other useful tools. If you don't have time to make your own decision, open a Section 529 college savings plan for each of your children. Section 529 college savings plans are one of the best college savings vehicles because of the tax advantages, the low impact on need-based financial aid, the flexibility, the high contribution limits and the lack of income phaseouts, and because control over the account remains with the parent. You should also explore some of the loyalty programs, because they provide an easy way to get additional money for your college savings plan.

 

 

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