A four-year public college can cost more than $16,000 per year on average
today, and a private college can cost twice that amount per year. To add to the
rising costs, the rate of tuition increases is not expected to slow in the near
future. It’s never too early to start planning for college for your children
nor is it too late to start planning for yourself. To help you save for college
the smart way, here are some useful tips to get you underway:
-
A 529 plan, named after Section 529 of the Internal Revenue Code, is a type of
investment account that helps you save for college. You do not have to pay
taxes on earnings, and distributions are tax-free as long as the money is used
to pay for higher education. Some states also offer “prepaid” 529 plans, in
which you can secure a tuition rate.
-
Apply for scholarships. The more scholarships you apply for, the better your
chances are for being awarded a scholarship and getting help financially. There
are different types of scholarships, grants, and merit awards, so it’s a good
idea to explore your options.
-
The stimulus package gave way to the American Opportunity Education tax credit,
which offers a maximum of $2,500 toward college tuition and related expenses
for 2009 and 2010. This tax credit is applicable for the first four years of
college.
-
More colleges across the country are becoming stronger academically and more
reasonable financially. A college that is considered to be economical does not
mean that its academic standards are compromised. If attending a cost-effective
college can save you money and offers the program you’re interested in, then a
more cost-conscious college may be the route to go.
One of the best investments you can make is in your education, so the sooner
you can start saving for college, the more prepared you will be. And, a higher
education can position you for a successful career.
