If You’re Looking for College Savings Plans, Here are Some Suggestions.
The average tuition for the 2019-2020 school year ranged from $41,426 (for private colleges) to $11,260 (for state colleges). That's the average tuition per year. And unless something changes in how people pay for education, college costs in the future are going to be even worse. Our number one tip: start saving money for college now. Here are some ways to start.
1. Open a Tax-Advantaged 529 College Savings Account
People tend to lean towards 529 accounts because they’re 1️⃣ tax-friendly, 2️⃣ state sponsored, and 3️⃣ have a low barrier to entry (only $25 in Colorado). But the most important thing to remember when it comes to investing in these accounts is to keep adding to the 529 each year (every month if possible). Otherwise, that initial $25 isn’t going to go very far.
2. Research your Higher Education Options
College costs vary among institutions, which is why researching tuition and sometimes even more importantly, expenses, at different types of schools — community colleges, public universities, and private colleges and universities, is essential to determining total annual educational costs. Don’t forget to account for things like housing, travel, extracurriculars, and supplies.
3. Save on a Regular Basis
If you’re ready and able to start saving for your child’s future education, then plan on doing so on a regular basis vs a few larger lump sum investments. Consider an automatic deduction every month, directly into an education account so you don’t have the option of missing a month.
4. Learn About your Financial Aid Options
Generally speaking, there are four sources when it comes to financial aid for higher education ✅ the federal government, ✅ your state of residence, ✅ the education institution, ✅ private organization or bank. And within these sources, there are typically four types of financial aid: loans, grants, scholarships, and work-study. In a given financial aid package, a student may qualify for multiple types of aid depending on how much financial need they demonstrate and their merit. Most aid that comes from the federal government is based on financial need, while aid from other sources may be either need- or merit-based.