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What are Some Ways to Save for College?

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  • Written By: Sherry Holetzky
  • Edited By: Niki Foster
  • Last Modified Date: 02 April 2018
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    Conjecture Corporation
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With the cost of higher education continually rising, it makes sense to save for college early. Putting a savings plan in place well in advance will help you be more prepared to pay for college when the time comes, so start today. There are some simple, low risk options available that will help you save for college, including Savings Bonds.

The Treasury Department is a good source of information for learning which type of bond is best suited to your needs. Savings Bonds are also a handy way for relatives to help you save for college. Many grandparents give bonds for birthdays and holidays instead of or along with other gifts. If you receive money for such occasions, consider using that money to purchase Savings Bonds.

Money Market Accounts can also help you save for college. They are very similar to your average savings account, are available everywhere, and offer a higher rate of interest. You’ll earn around twice as much as with typical savings accounts. There is usually a minimum balance required, but overall, this is a good way to save for college. It’s a good strategy for someone who doesn’t feel investment savvy, doesn’t have a lot of money to invest, or prefers not to take much of a risk.

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Certificates of Deposit (CDs) offer another opportunity to save for college. You determine the amount you want to invest and for how long. The more you invest, the greater your return will be, and long term CDs offer a higher rate of interest than short term ones. Withdrawing money from a CD early will result in penalties, so be sure to choose the right option.

While these options are available for any savings plan, there are also 529 plans or 529 programs, which are specifically designed to help you save for college. You may end up better off in the long term by stashing your cash in a 529 plan, because you won’t have to pay federal income tax on your earnings if the money is used for qualifying college expenses.

The options above are listed for informational purposes and do not constitute investment advice. You should speak to a qualified financial adviser before making a decision. As you consider which options you want to employ to save for college, you may also want to contact the financial aid department at your school of choice and ask about their pre-paid tuition plans.

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Discuss this Article

honeybees
Post 3

Most high schools in our community will allow students to complete classes for college credit while still in high school. I know several students who have almost a year of college credit completed when they graduate as a high school senior.

This can go a long way towards reducing the total amount of college money that will be owed in the coming years. It also gives the students a good exposure to college classes. They must be dedicated students to pursue this, but it can sure pay off for those who take it seriously.

sunshined
Post 2

The cost of education has continued to increase over the years, and it can be quite a financial burden for many families. We have a local community college that has grown substantially over the last several years.

This is a great alternative for kids before going to a university. Many times they are able to live at home after high school for a couple of years and earn their associates degree at a community college before transferring to a university.

This can save quite a bit of money, while allowing them to get used to college classes and still be getting their education.

bagley79
Post 1

One of the best things to remember about saving for college is to start as soon as possible. The longer your money has to accumulate and receive compound interest, the more you will have. If possible, parents and kids should begin to save money for college as soon as they are born.

Even if you can only save a little bit when first starting out, you have quite a bit of time for that money to grow. I invested in conservative mutual funds for my kids college education so when the time came to pay for that education, most of it was already saved.

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