4 Simple Steps for Saving for College

October is Financial Planning Month, and it's a great time to focus on one of the biggest financial goals for many families: saving for college. With rising tuition costs and the need to apply for financial aid, getting a jump-start on these tasks can make a big difference. Here’s a straightforward guide to help you save for and pay for college.

1. Start Saving for College Early

The sooner you start saving, the more you can benefit from growth over time. Here are some easy ways to build your college fund:

• 529 College Savings Plans: These special savings accounts let you save money for college expenses with tax benefits. You can choose investments that grow your savings over time, and the money you withdraw for college costs is tax-free.
• Coverdell Education Savings Accounts (ESAs): Similar to 529 plans, ESAs offer tax-free growth and withdrawals for educational expenses. They also cover K-12 expenses, though they have lower contribution limits.
• High-Yield Savings Accounts: These accounts are a simple and safe way to save money with better interest rates than a regular savings account, such as Provident's Money Market accounts.

2. Plan How Much You Need to Save

To figure out how much to save, estimate the total cost of college:

• Tuition and Fees: Look up current tuition costs for the colleges your child is interested in and estimate future costs.
• Room and Board: Include costs for housing and meals.
• Books and Supplies: Don’t forget textbooks and other supplies.
• Other Costs: Think about personal expenses, transportation, and any extra activities like studying abroad.

How much does an education actually cost?

2022 - 2023 Average yearly cost of attending each type of college or university*

*Source

3. Applying for Financial Aid

Explore financial aid opportunities to help pay for college:

• FAFSA: The Free Application for Federal Student Aid (FAFSA) offers federal financial aid, including money you don't need to pay back.
• State Grants: Many states offer financial help based on need or achievement.
• College Scholarships: Colleges often provide their own scholarships. Contact the financial aid office for details.
• Private Scholarships: Find scholarships from businesses, organizations, and community groups using websites and tools like Provident's Scholarship Search.
• Work-Study Programs: These programs allow students to work part-time while studying to help pay for college.

4. Stay Flexible and Review Your Plan

Regularly check your savings plan and make adjustments if needed. Life changes, and so do financial situations, so be ready to adapt.

With thoughtful planning and informed decisions, you can make higher education more affordable and accessible for your family. If you need assistance with your financial planning, consider consulting with a financial advisor who can provide personalized advice and guidance.