When I went to college, I had no idea what I wanted to major in. All I knew was how to save for college and that I wanted to earn a degree so I could provide a decent income in a career I enjoyed.
I changed my degree a few times before I finally settled on journalism. I love seeing words on paper (or a computer screen) come to life. I also love that I can earn a good income and be a full-time mom. And I know that if something were to happen to my husband, I would be able to provide a good income for our family.
I believe that everyone, especially women, should feel confident and happy in their chosen careers. So I will urge my girls to get a good education and obtain a successful career.
But, with rising college tuition costs, gaining a college degree can seem like a daunting task. Thirty years ago, college tuition for one year at a public four-year institution was $3,190, according to a report by College Board. Today it is $9,970. That is more than two-and-a-half times as much as it was in 1988.
How to save for college costs in 3 ways
So how can we help our children earn a good education without drowning in student loans?
1. Open a college savings account
One of the most effective ways to save for your child’s tuition is to open a 529 college savings plan. This after-tax investment allows you to withdraw tax-free money for eligible college and K-12 education expenses. And depending on which state you live in, you may even get a state tax deduction or credit.
For example, the state of Utah offers a tax credit of 5% of your contributions up to $192 per beneficiary.
With numerous 529 plans available, so make sure you do your homework when choosing a 529 plan. You don’t have to go with your state’s plan if it doesn’t offer tax breaks. If that’s the case, look for the plan with the lowest fees.
2. Coverdell Education Savings Account
When you put money in this account, you can pay for education expenses, including K-12 costs. So, if you decide to put your child in a private school, you could use this tax-free money to help pay for the school tuition.
There are limits to how much you can contribute, so depending on the situation, a 529 plan may be a better choice. Once again, do your homework to help you decide if this option is right for you.
3. Encourage your children to participate
Talk to your children about college. Tell them about the importance of and blessings gained from earning a college degree. But also talk to them about the costs. Encourage them to get good grades and earn scholarships. You can also encourage them to get a job and contribute to their college savings account.
Neither of my parents had a college education. I think that’s why they pushed their children to seek higher education. They even offered to buy each of their children a car if he or she graduated as valedictorian. A few of my siblings took them up on that offer and received a car and full-ride scholarship to college when they left high school.
Those who didn’t keep their grades up, like me, got part-time jobs and saved as much as possible in our college fund. We understood the importance of earning our college education, mentally and financially.
Save for retirement before you learn how to save for college
Worried parents often put their extra income towards college education instead of retirement. Don’t! If it comes down to it, your children can take out loans and they’ll have their whole lives to pay them back. If you don’t have enough funds to retire when it’s time, you’ll be looking for a Walmart greeting job to make ends meet. At that point, learning how to save for college does you no good.
I often lay awake at night, wondering what the future holds for my children. The future seems so uncertain at times. I wonder if my children will have successful careers, get married, and be safe. I hope this world is kind. I hope my children gain lifelong friendships. I hope my children are happy. And I hope they understand the value of education.
I’m going to do whatever I can to help them achieve that. What are you doing to save for your children’s college education?