Saving for My Child’s College Tuition
Posted on September 24, 2019 by CHS
For many families, saving for their child’s college education can seem like a daunting task, particularly given the high cost of college today. However, there are many tips and resources available to help families save for their child’s college education.
If possible, start saving early. It is never too early to set aside money for college. The sooner you start, the more your money will accumulate interest, and the more your savings will grow. Setting aside money for your child’s college will also help you get into the habit of saving. Treat your savings for college like a monthly bill. Put money aside every month for your child’s college fund just as you would any other monthly bill.
529 Prepaid Tuition Plans
A 529 plan is an investment plan designed to help families save for a beneficiary’s (typically one’s child or grandchild) future higher education expenses. These plans come with tax advantages for families to incentivize saving for college. Savings in a 529 plan are not taxed federal income taxes, and withdrawals remain tax-free when used for qualified higher education expenses.
529 plans are administered by state agencies and organizations. In California, the plans are administered through the ScholarShare College Savings Plan. ScholarShare529 allows families to choose from a variety of investments, including an easy age-based investment intended for individuals and families saving for college. You can use the money at any state or private college, technical school, or community college that offers financial aid, and even some schools outside the US. Many plans offer automatic deductions from your checking account each month. Withdrawals are free from federal tax and can be used to pay for tuition, certain room and board expenses, books, computers and related technology expenses, and required equipment and supplies. In addition, up to $10,000 annually per student can be withdrawn free from federal tax if used for tuition expenses at a public, private, or religious elementary, middle, or high school. For more on ScholarShare529, click here.
ScholarShare also offers several other valuable tips for managing the costs of higher education: https://www.scholarshare529.com/plan/reducing.shtml
If you are finding it difficult to save, you can start small. Every dollar counts and, with interest, can potentially add up to tens of thousands of dollars for your child’s college fund.