Here's How You Can Start Saving For College Right Now
The cost of sending your kid off to earn their college degree isn't an easy one to digest — today, the national average for a public in-state four-year college is around $20,000 annually, for example — but if you start preparing for it now, you can help eliminate (some of) the stress you'll face come high school graduation. From exploring the best savings vehicles, like a 529 plan, to using holidays and other special events to save, we've identified four ways you can get a jumpstart on things.
Open a 529 college savings plan
Don't beat yourself up if you haven't heard about this — it is never too late to start saving. Here's the lowdown: a 529 is an easy way to put money aside for college. These plans, like
the T. Rowe Price College Savings Plan, help people make the most out of their money by saving in a tax-advantaged way and can be quite affordable too. You can open a T. Rowe Price College Savings Plan with as little as $50 per month or a one-time contribution of $250. The money you save can be used for a variety of expenses such as tuition, textbooks, and room and board. The plan applies to several types of higher education like college, graduate school programs, and vocational and technical institutes. Make sure your child will be able to enjoy the benefits of your early planning!
Rethink birthday and holiday gifts
As an aunt five times over, one of the things I get asked consistently is to Not. Give. Any. More. Toys. "I can't pick them up fast enough," says my sister-in-law. Have an open conversation with your lovely, gift-giving family and see if they'd be interested in giving money for the child's piggy bank or college savings plan instead. They can contribute directly to your existing T. Rowe Price College Savings Plan account easily.
Do you typically get quarterly or end-of-the-year bonuses? Rather than looking at them as an excuse to splurge on something, direct a portion of it into a 529 plan. You can even speak with your employer beforehand and ask them to directly deposit it into a different account for your child.
Have your kids take AP classes in high school
Once your kid enters high school, they have an opportunity to enroll in AP classes, which will give them a head start on college credit. The more college credit they have under their belt before they start, the less you as a parent have to pay for, credit-wise. It's a small step, but it definitely can help.
Get More Information About Saving For College From
The T. Rowe Price College Savings Plan
The T. Rowe Price College Savings Plan is one of the best 529 plans in the country, rated "Gold" by Morningstar in 2015. It is open to residents of any state and can be used at nearly any college in the country. You can start saving with as little as $50 per month and take advantage of tax-free earnings potential. This feature means less money toward taxes and more toward college. Friends and family can contribute to your account through gift contributions. Learn how to get started saving today. TRowePrice529.com.
The T. Rowe Price College Savings Plan is offered by the Education Trust of Alaska. You should compare this plan with any 529 college savings plan offered by your home state or your beneficiary's home state and consider, before investing, any state tax or other benefits that are only available for investments in the home state's plan. Please read the Plan's Disclosure Document, which includes investment objectives, risks, fees, charges and expenses, and other information. You should read the Plan Disclosure Document carefully before investing. T. Rowe Price Investment Services, Inc., Distributor/Underwriter.
Morningstar analysts reviewed 63 plans for its 2015 ratings (10/20/15), of which four plans received a "Gold" rating. To determine a plan's rating, Morningstar's analysts considered five factors: the plan's strategy and investment process; the plan's risk-adjusted performance; an assessment of the individuals managing the plan's investment options; the stewardship practices of the plan's administration and parent firm; and whether the plan's investment options are a good value proposition compared to its peers. Plans were then assigned forward-looking ratings of "Gold," "Silver," "Bronze," "Neutral," and "Negative." Each year, certain of the industry's smallest plans are not rated. Analyst Ratings are subjective in nature and should not be used as the sole basis for investment decisions. Analyst Ratings are based on Morningstar analysts' current expectations about future events and therefore involve unknown risks and uncertainties that may cause Morningstar's expectations not to occur or to differ significantly from what was expected. Morningstar does not represent its Analyst Ratings to be guarantees.