How to Save for Your Child’s College Education
In recent years, there has been a lot of discussion about student loan debt. While families scrambled to make ends meet this year, we’ve seen a drastic setback in savings for higher education.
Many families reported suspending their contributions to their child’s education fund, while many more had to use a portion of those funds to cover essential expenses through the pandemic.
As Americans work towards recovering financially from COVID-19, we are reminding families of the importance of re-establishing their child’s education fund or, for some, starting one as soon as possible.
Parents dream big for their children, and their aspirations commonly include a desire for their child to have a quality education. Even with the best intentions, it can be challenging for families to include college savings in the budget.
Lack of college savings often leads to an increase in student loans, which can become a burden for young adults as they make their way into the real world. According to Forbes, this year, the overall student debt reached a record high of $1.6 trillion, and that number is expected to continue rising.
What You Can Do Now
The two most important tips for college savings are to start early and stay invested. Higher education varies and comes at different costs, but it is better to be prepared for what your child may choose.
1. How much to save - On average, it is recommended that families save $250 per month per child to fund higher education at an in-state public college. For an out-of-state public college, that amount rises to $450 per month. These numbers may seem steep, but average tuition costs increase by about three percent each year.
2. Staying on track – If you’re unable to make the recommended contributions, don’t let this derail you. Any money added will continue to push you closer to your goal. It can be tempting to suspend deposits to a college fund when the time for college seems far away, but you can easily stay on track by automating your contributions every pay period or once per month. After a few short months, you’ll become adjusted to saving.
It’s Never Too Late to Save
When you haven’t begun saving or if you’ve suspended your savings contributions, it can be challenging to find the right time to start saving. You can jump that hurdle immediately by starting to save now.
Several programs offer incentives or tax breaks to save for education. If you are looking for a simple solution now, First Florida Credit Union recommends opening a savings account specifically designated for your child’s college savings. No matter the amount, automate your contributions as soon as possible.
If you are looking for help saving for your child’s college fund, contact First Florida today at (800) 766-4328, ext. 1 or visit FirstFlorida.org.