Whether you’re saving for college for your children or yourself, the sooner you start saving, the sooner you’ll reach the grand sum. Considering the cost of college tuition and fees has increased up to 212 percent in the last 20 years, dropping spare change in the “college savings” every few days likely won’t cut it. You need a concrete plan to create a college savings fund fit for the 21st century. To start saving for college, consider these financial options.
Open a college savings account
A little discipline can go a long way when it comes to saving for college. One of the steadiest ways to save is by making monthly deposits into a college savings fund. You just need to resist the urge to skip a month—or worse, to make withdrawals. Consider opening a share savings account with DEXSTA exclusively for college savings. A share savings account establishes your membership in the credit union and pays interest on your savings over time.
Buy a savings bond
Savings bonds issued by the U.S. Treasury are a sound option for long-term savings, such as college. While a 2017 study found that direct household participation fell to 1.3% in 2016, savings bonds are still a secure investment with less risk than stocks. In fact, many savings bonds guarantee to double in value after about 20 years (once they “mature”). As such, savings bonds can be a practical option for parents with newborns or young children.
Consider a 529 plan
A five-twenty-what? Though it might sound ambiguous, a 529 plan is simply a college savings plan that offers tax and financial aid benefits. Almost every state provides at least one 529 plan. For example, the State of Delaware sponsors a 529 plan. This plan aims to help state residents pay for education expenses without accruing too much debt.
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Whichever route you choose, saving for college is a valuable investment in your financial future. According to a study by the Pew Research Center, the median yearly income gap between high school and college graduates is approximately $17,500. Multiply that by a 40-year career, and the return on investment of a college education adds up to $700,000.
At DEXSTA, we can help you start and maintain a college savings fund with a dedicated savings account. Make an appointment at one of our branches or give us a call. We’re happy to walk you through financial options.