April 8th, 2013
**Today’s guest post is contributed by the editors of The Allstate Blog.**
Even if your child hasn’t yet learned to walk, it’s never too early to start saving and budgeting for his or her college education. In these tough economic times, when it comes to creating and adhering to a successful savings plan for college, you may need to work over the long term to save enough money. In order to get a substantial head start on the rising cost of tuition, it’s a good idea to have several eggs in your basket when you’re budgeting for college.
According to the National Center for Education Statistics, undergraduate tuition for the 2010-11 school year was estimated to be $15,605 at four-year public institutions and $31,975 at four-year private schools, and these numbers have been on the rise since 1980. If this trend is any indication, you can probably expect the cost of a college education to continue to increase.
As a parent attempting to save for a child’s future education, these figures can be daunting. However, in order to get over the shock of the initial sticker price and set the groundwork for a successful college savings plan, you’re going to have to start small and put the big picture on the back burner. Your toddler is only in diapers, remember?
If you’re able to put $10 a week into a college savings account, it will amount to $9,360 over 18 years. An interest rate as small as 4 percent could also yield a heftier total of $13,875 over 18 years. If you’re able to set aside $20 a week, then you’ll have $18,720 at the end of 18 years.
529 College Savings Plans
Another option you may want to explore is the 529 College Savings Plan. Created in 1996, 529 College Savings Plans are operated by a state or educational institution and are specifically designed to help families save money for college. Whether you want to have a set sum of money directly deposited from your paycheck or make deposits on your own, the funds are invested and will earn interest similar to a 401(k).
One of the major benefits of 529 Savings Plans is that grandparents, friends and loved ones can all deposit money into these accounts. If your son or daughter has more toys than they know what to do with, you can encourage relatives to contribute to the college fund when birthdays roll around instead of adding to the clutter of colorful plastic.
Alternative Ways to Save
While saving money for college is likely your first priority, there are also ways to budget money once a child is enrolled at school. Money-saving tips for college students include buying used books instead of new ones, applying for work study programs, or even living at home instead of in a dorm, as this will help cut the cost of room and board.
When you’re establishing the groundwork for a successful college savings plan, it’s best not to get overwhelmed by the big picture. Starting early and working on a steady plan can help make saving for your children’s education fit into your budget.
This guest post comes from the editors of The Allstate Blog, which helps people prepare for the unpredictability of life.
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March 22nd, 2013
Each month, we take a look at data from our members to analyze the current state of credit and debt in the U.S. This month we’re honing in on student loan debt, which has been a hot topic for quite some time now. What we found might surprise you.
January 30th, 2013
This week on Facebook we shared the following question from our Credit Advice Center: “Should I pay off my entire credit card balance with student loans?” This one spurred a lot of conversation on our Facebook wall, and it got me thinking – What should and can you do with student loan money? Let’s take a look.
October 15th, 2012
When I started college, the internet wasn't the machine it is today. You couldn't apply for a credit card online. It could only be done over the phone, via snail mail or on a college campus, where credit card companies would set up tables and advertise to new, wide-eyed college students. Sure enough, I was one of those new college students who knew nothing about credit cards, and I applied for my very first card.
June 27th, 2012There's a lot to think about stepping into the real world. Are you prepared? This infographic, from the team at Credit Donkey, is a helpful guide to help you on your way after graduation.
May 23rd, 2012
Not sure how to start talking to your kids about money? Don’t worry, the President has your back. The White House has just launched a new interactive website, Money as You Grow, to help kids and parents communicate more effectively about money.
May 17th, 2012
This spring, more than 1 million new graduates will be thrust into the work force. And according to a recently published Rutger's study, more may come out of school with debt than come out with jobs.
November 3rd, 2011
The average consumer is saddled with $29,985 in student loan debt, according to recent Credit Karma data. That’s an increase of 6% over last year. Pair those figures with a weak economy and a slow job market and the outlook is grim for many young adults. In light of this trend, President Obama has announced new measures to make student loan debt easier to repay. Some of his proposals include capping loan payments to 10% of a borrower’s income and offering debt forgiveness after 20 years of payment instead of the present 25 years.
Unfortunately, these rules only apply to federal loans. To help consumers struggling with private student loan payments, the Credit Union National Organization (CUNA) established a program called EdSucceedPrivate Student Loan Consolidation.
September 29th, 2011
Maybe you shouldn’t get your 3-year-old his own credit card, but you should start teaching him about money. Only you can instill your children with smart credit habits, even before credit cards come into play.
September 20th, 2011
It’s sports week here at Credit Karma, and lucky for me, the good people at Visa and the NFL have already created the perfect intersection of the football and financial realms.
The result is Financial Football, a computer game where the high stakes, high impact world of football collide with… financial literacy. The results are wholly underwhelming.