Securing enough funds for college expenses can be challenging. Paying for tuition, room and board, supplies, and other college necessities quickly adds up. If you haven’t started saving for college for your child or yourself, we’ve got some helpful saving and planning tips.
According to U.S.News, the average cost of tuition and fees for the 2023-2024 school year is $42,162 for private colleges, $23,630 for out-of-state students at public universities, and $10,662 for in-state public schools. It’s never too early to start building savings for college. As the costs associated with college continue to rise, parents and students should consider these strategies to save for college expenses.
A 529 College Savings Plan is designed for qualified education expenses including tuition and fees, books, room and board, computers and other college expenses. Parents can open a 529 College Savings Plan for their child as soon as they’re born which gives the account time to grow. Depending on the plan you choose, there may be tax advantages so be sure to consult your tax advisor.
Bonus Tip For Students: You can open a 529 College Savings Plan for yourself once you’re 18 years old. Funds from your 529 shouldn’t affect your financial aid benefits. To learn more about how a 529 Savings Plan can help you, check out this helpful article from Experian.
A Coverdell Education Savings Account (ESA) is another designated college savings account, but it does have eligibility restrictions and contribution limits. This account can only be opened for beneficiaries under the age of 18 and contributions cannot exceed $2,000 per year. Depending on your financial needs, it may be beneficial to open both a 529 Saving Plan and an ESA account. For additional information on Coverdell Education Savings Accounts please visit irs.gov/taxtopics/tc310. To learn more about potential tax advantages, please consult with your tax advisor.
A high yield savings account is a great option for students preparing for college in the next few years or it can be used to save in tandem with other designated college savings accounts.
A benefit of opening a high yield savings account is the flexibility of using the funds depending on the type of account you choose. You can use the funds to pay for expenses that aren’t included in one of the previously mentioned methods or as a supplement to them. It’s also a great way to tuck away money for unforeseen college expenses or emergencies. Consider diversifying your saving methods by using a Money Market Account or Term Share Certificate (or CD). Each offers its own unique benefits depending on your needs.
Scholarships and grants provide free money to help pay for your college education. Learn more about these options to determine if one or both will suit your financial needs.
Scholarships are a form of free financial aid provided to students by governments and private institutions. They are granted based on criteria such as academic merit, diversity and inclusion, athletic skill, and financial need. In order to qualify, you must meet the eligibility requirements provide by the scholarship granter.
How to Get Scholarships for College
A grant is also a form of financial aid that is most often granted or gifted to students by federal governments, state governments, colleges and universities as well as organizations. In order to qualify, students will need to provide financial information about themselves and parents/guardians. Eligibility is normally based on your cost of attendance as well your Student Aid Index (SAI). Grants typically do not need to be repaid.
How to Apply for College Grants:
Saving even small amounts each month for college can reduce the amount of money you need to borrow to get an education. We understand that sometimes savings, scholarships, and grants just aren’t enough to cover all the costs.
We offer a variety lending options, including Home Equity Loans, Home Equity Lines of Credit and Personal Loans that offer low rates, flexible terms, and affordable repayment options. They can be used to fill financial gaps or as an alternative for college loans. If you’re looking for alternate funding for college, contact us today!