Celebrating College Savings Month
This September, we’re celebrating College Savings Month with some smart ways to plan and pay for college.
The Rising Costs of College
Over the past 30 years, the cost of attending college has continued to climb. According to the College Board’s Trends in College Pricing report, the average cost of a private nonprofit four-year institution has increased by 3.6 times since 1990. In the same period, the average price of a public four-year institution has increased by 2.78 times. Today, the average cost of a four-year undergraduate education is more than $85,000 at a public college and more than $190,000 at a private college.
While saving for college may seem overwhelming, it doesn’t have to be. Being proactive and forming a strategic plan are key. Here are eight easy tips to get started.
- Start early
Take advantage of compound interest by starting as early as possible. If you’d like to see how the power of compound interest could work for you and your family, you can input your information into this Compound Interest Calculator from the U.S. Securities and Exchange Commission.
- Form a plan
Parents with a plan have double the savings compared to non-planners. According to a recent Sallie Mae report, planners saved an average of $22,169 versus just $9,208. Creating a prepaid tuition and education savings (529) plan is a great way to get ahead. Learn about the process, benefits, risks and tax implications of saving for college at the Allegiance Bank Financial Education Center.
- Be consistent
Successfully saving for college requires consistency. You can’t just set it and forget it. At least once a year, review your budget, goals, and current savings to see what’s working or what’s not—and look for new ways to increase your contributions.
- Put “bonus” money aside
Build your college savings by putting monetary gifts from birthdays, showers, holidays, and other special occasions into your college savings account. Other one-time payments, such as a work bonus or tax return, can help you meet your savings goals without drastically impacting your lifestyle.
- Make it automatic
Take advantage of tools that make saving simple. Automatic transfers can help you save money before you can spend it. Even a seemingly small amount can make a big difference over time.
- Apply for scholarships and grants
Supplement your college savings and income by taking advantage of financial aid options that you won’t have to repay, including merit- and needs-based scholarships; state, federal and university grants; and work study programs.
- Consider all the costs
In addition to tuition and housing, the average family spends an additional $1,700 to $3,300 per semester on miscellaneous college costs. This can include groceries, meals, activities, toiletries, gas, car insurance, utilities and more.
- Fill out your FAFSA
When it’s time, you can complete the Free Application for Federal Student Aid (FAFSA®) process to explore your federal student loan options. For the academic year 2019–2020, just 71% of families filed the FAFSA, potentially missing out on thousands of dollars in financial aid.
Visit the Allegiance Bank Financial Education Center for more resources on financing and planning for college.