5 Steps to Make Saving for College Doable

saving for college

saving for college[Today we have a guest post from Nate at LendEDU.com, which helps students and graduates to get the lowest rates on student loans and student loan refinances. Fortunately, Nate’s topic today fits perfectly into my saving for college series. Check out the first two!]

The costs of higher education have risen dramatically over the last decade. Affording college has become increasingly difficult for students and their families. Today, 7 in 10 college graduates are graduating with student loan debt. Student loan debt is weighing down our graduates and causing much headache.

While the costs of college may seem overwhelming, there is no doubting that a college education is valuable. College graduates go on to earn $830,000 more over a lifetime than those with just a high school education.

That being said, how does a family plan for the rising cost of higher education?

1. Open a college savings account 

Tax-advantaged government savings plans are great ways to invest and save for college. Today, you have more options than ever and it is very easy to get started with 529 plans. Set up a recurring deposit and watch your savings grow without tax liability. Tax savings can be significant, especially if your child has time before needing the account funds. [Also stay tuned for my next post, which will dive more into different savings options.]

2. Calculate the costs 

To achieve realistic college savings goals you need to understand what college will cost! Don’t let the sticker price turn you off. The final or net price of a college education tends to be significantly less than than the sticker price. Sticker prices can be lowered by everything from scholarships, grants, and tax benefits. There are a number of net-price calculators available on the internet. A quick Google search and you will be able to put together a realistic set of savings goals.

3. Get your kids involved

Talk to your kids about the costs of college. Today, most high school students [and college students!] are clueless when it comes to personal finance. You need start talking about the costs of higher education as soon as middle school. Push your kids to perform academically and show them the value of merit-based scholarship awards. Advise your kids to start savings early and encourage them to set aside part of their allowance for education. At LendEDU, we have a student loan video guide aimed to help get kids informed.

4. Start early

Looking at the costs of higher education may not be super fun, but the earlier you start, the better you’ll feel about the whole situation. Saving early can mean the difference between your kids graduating with thousands in student loan debt and your kids graduating without debt. Compounding returns in tax-advantage savings accounts can really add up! If you start early you won’t even need to talk to your kids about student loans.

5. Don’t stop saving for retirement

More parents and grandparents are finding themselves putting off retirement savings to save towards higher education. Don’t let your desire to help your kids pay for college hinder your retirement. If needed, your child can take out student loans. You can’t take out retirement loans!

Balancing your financial goals with your savings goals can be difficult. Talking with a financial advisor may be a good decision. Many employers offer discounted or free financial advisement for employees. Check to see if your employer can help you go in the right direction.

Nate Matherson is a Co-Founder at LendEDU.com. LendEDU is a marketplace for student loans and student loan refinance. LendEDU helps borrowers find the best terms and rates available with one application.

What are your tips to make saving for college easier? 

(photo cred)


8 thoughts on “5 Steps to Make Saving for College Doable

  1. My wife and I will continue to put saving for retirement ahead of saving for college. We will do our best to save as much as we can, but our kids will be taking out student loans.

    We both had student loans (along with some help from our parents) and both agree that having the loans taught us a lot about life and being responsible. Plus, if we are at the point were we did great saving for our retirement, we can always help our kids pay off their loans early with a gift.

    1. I think that’s a good plan. Helping them out while also letting them make those loan decisions. I think when it comes to loans, the biggest problem is that a lot of parents don’t help their kids understand the pros and cons of using them.

  2. I’m going to do the best I can, but I’m not going to tell them to get loans. It’ll be more in the vein of teaching them how to apply for scholarships like mad, seek out grants, and save their own cash. If they need loans so be it, but $830,000 over a lifetime isn’t so much when you take into consideration loans and interest. Depending on the size of the loan taken out.

    Coverdells are also great savings vehicles depending on your goals! And these are all great tips for saving BEFORE that fateful first tuition bill arrives.

  3. Great suggestions. The two things I always suggest are consideration of military service and community college. Through military service, individuals can learn a skill/trade while earning decent salary/benefits, use programs like Tuition Assistance (government pays 75% of costs) while on active duty, and the GI Bill once separated from service, all with the added bonus of serving your country. Individuals can earn a college degree (multiple degrees in fact) to pair with their training and real world experience at no expense…other than the service.

    Community College. There is no requirement, or need, to attend a university all four years. A better option is to spend the first two years at a local community college; staying at home and working at least part-time. Overall it is a great way to spend less money and be more prepared. The first two years are primarily spent just taking core courses (e.g. English) and lower level specialty courses anyway.

    1. Agreed. There’s a stigma for some people when it comes to community college, but it can be just as valuable. The military is also a good opportunity for those who can do it. I’ve had a lot of friends who have done that and it’s worked out quite nicely for them.

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