The cost of college is slowly creeping higher as the return in pay for a college graduate slowly declines. The average college student will make significantly less than the average college student made as little as ten years ago. This is mostly due to a struggling economy so beginning a college savings account for your child or children can be extremely helpful to their future.
There are different types of savings accounts
Saving for college is essential to avoid taking out large student loans. The type of savings account that will best fit your lifestyle and income varies so there are a few options out there to establish a savings account for college. The most commonly used option, and the only one available across the United States is the 529 Plan. Option number 2 is a savings account through a private bank or college fund company. One of the newest options are called Loyalty programs like Upromise and BabyMint. One other choice is a minors trust fund.
How to make the best choice for your family
Research states that the 529 Plan is the best option for almost any family situation. The money is saved through your state treasury, is tax free until the year funds are withdrawn, and also remains in complete control of the parent(s) who funds the account rather than going into the hands of a not as responsible college student. A private savings account can effect the expected family contribution when your child applies for financial aid.
Loyalty programs are typically created by business or credit card companies to help you build a savings account. Kroger works with Upromise, and every time you buy groceries and use your Kroger Plus card they contribute a small percentage of the cost of certain items to an account. This is basically a hassle free way to help you save up for your child’s future and can be used in tandem with any of the other accounts.
Making tough decisions
If you are having difficulty choosing the correct savings account for your needs, contact a financial planner who specializes in future and family planning accounts to discuss your options thoroughly. You may decide to take a completely different route than the ones discussed above but most generally they will suggest one of those options. After you have made a decision, take your time thoroughly setting up an account with a specialist. Contact your state for a 529 Plan, research banks and private companies for the best interest rates for a private account, or set up an account online to manage Upromise or BabyMint.