Saving for Your Child’s Education

The dfree® Generational Wealth Series

Start an education fund as soon as you plan on having children or when you get pregnant

If you can only save $50 per month for college, from the time your child is born to age 17, you’ll have $10,800 saved and that’s without interest!

Find out the costs. Research options and plan accordingly

Budget well. Plan for tuition, supplies, transportation, etc. Remember, your child can take out a student loan, but you cannot take out a retirement loan

Saving for your child’s tuition? Open a 529 account, which allows you to invest money tax free to pay for private school or college. Set up automatic biweekly or monthly payments

There are three types of 529 accounts – Prepaid tuition plans let you lock in future tuition rates at state colleges while college savings plans are more flexible yet do not guarantee tuition rates. Under Trump Administration tax changes, this year 529 accounts can be used for private school tuition, up to $10,000 annually

Check into a Roth IRA, which allows tax free savings that can be used for retirement if your child decides not to attend college

EDU | 2

Open savings accounts for your children and teach them how to save their gift and earned money for an important education goal

When your children are old enough to work, have them split their paychecks into immediate needs, short-term goals and long-term goals – with college in the mix

Don’t set up taxable accounts in children’s names as those accounts likely will lessen the amount of financial aid offered

If planning early, cash savings accounts have low interest rates while options like mutual funds or investing in the stock market can bring larger returns, so discuss with a professional financial advisor

Teach your children from the start to love learning and being smart. There are many scholarships available for high achieving students, such as A Better Chance

If the goal is college, you can lower costs by reducing the number of credits needed and the school type. For instance, advanced placement students can get college credit and a community college degree can be transferred to a four-year college

Make sure you ask the school/college about sibling discounts, as many offer them

EDU | 3

If you have family members, such as grandparents, willing to help defray costs, have them gift the money directly to you so that bills can be paid after financial aid is awarded

Today there are many accredited, online schools with lower costs. U.S. News ranks these college programs just like others. (https://www.usnews.com/education/online-education)

Consider whether anyone in the family can take on a job where the income is devoted to education savings. If not, think about what skills you have that can help you start a business and invest extra income

If your family is low-income yet your child excels in school, don’t rule out expensive colleges, like the Ivy League, as they often offer free tuition for low-income students

To get financial aid for college, you need to complete a FAFSA form – which can be complicated. Many online tax apps will auto-generate a FAFSA form (https://fafsa.ed.gov/)

If you’re disciplined with your credit card use and pay off the full balance every month, consider choosing a credit card that offers cash-back rewards directly deposited into a 529 for college tuition

Open a free Upromise account to earn cash back from shopping that gets saved for college (https://www.upromise.com/)

Set up a designated PayPal or other account that makes it easy for family and friends to gift cash for college instead of more routine presents

EDU | 4