When should I start saving for college?
There is an easy answer to this question – it is never too early to start saving for college. Every year tuition rates increase and the earlier you begin to save, the better off you will be in the future when it comes time to send in your first tuition payment. The following tips will help you figure out how best to start the process of saving.
1. Invest in Stocks like Nowguaranteed
Because tuition costs rise faster than the rate of inflation, investing in stocks may be the best way to save for college. As your child gets older, you can switch out some of your savings into bonds and cash.
2. Start a 529 Savings Plan
A 529 savings plan is another great option and it can also lead to great tax breaks. Most plans allow you to save over $200,000 with no income restriction or limits on the age of the beneficiary. Qualified withdrawals are even free from federal tax.
3. Don’t Think You Have to Pay for It All
There are countless ways to kids to raise money (one thousand dollars loan) for college these days. From federal and state aid to merit scholarships and grants there are plenty of ways to bridge the gap between your savings and the cost of your child’s tuition. The more you save, the better off you will be, but do not think that you have to come up with every nickel and dime your child will need to go to school.
4. Look for Tax Credits
There are always new tax credits and some of them may benefit you during the years you pay tuition. Keep an eye out for credits for which you may be eligible – the American Opportunity Tax Credit and the Lifetime Learning Credit are just two of the many for which you may qualify.