The new year brings new goals and resolutions. The most common are things like going on a diet, joining a gym, and getting our finances in order. One very important area of your finances to consider that you might not have thought about is the cost of college tuition - either for you, your spouses continuing education, or your children.
Students in the class of 2013 graduated with an average of $35,200 in college-related debt. With the challenges and costs of paying for higher education growing, saving now can have big impacts later. But with so many plans and savings options available, it can be overwhelming trying to find the best options, or even know how much you should be saving.
- Inspiration to start: Children with a college savings account are six times more likely to attend a four-year college compared to children with no dedicated college savings account. In addition, according to the U.S. Census Bureau, college graduates earn an average of $1 million more than high school graduates during their careers.
- Define your savings goals: The first step is to determine how much you ultimately want to save for your child's education. Do you want to save for tuition only or include room and board? All four years of college or just two? Public or private? You can use a college cost calculator to forecast what the estimated cost of college will be when your child is ready to enroll.
- Start early and save often: Start saving as early as possible - you can even open an account before you have children. You’ll be able to put away a smaller amount and will have more time for your money to grow. It’s never too late to start, but the later you do, the less time you have to build your funds.
- Find Your Fit: Nearly every state offers a 529 plan, but you don’t have to go with your state’s plan if it isn’t the best fit for you. You can compare 529 plans by feature and by state.
Once you've used the tools to figure out how much you or your children's future college costs will be, it will be much easier to find the right savings plan to fit your needs.