Maximizing College Savings
Advice on remedying a late start and optimal timelines for parents.
- Written by Mike Sierra, Senior Vice President, 1900 Wealth
For those who might not have initiated early savings for their children’s college education, what advice would you offer to help them make up for lost time?
First, don’t panic. There are many valid reasons why you may have put off starting a savings plan for your children's future education. Perhaps, you've prioritized paying off school loans or other debt, or you've been focused on building your retirement savings. Whatever the case, start by assessing your timing and the appropriate options.
Educate yourselves on the costs of higher education and various college savings plans out there. There are essentially two types: prepaid plans and savings plans. Additionally, gaining a general understanding of the financial aid process can be quite helpful. Chances are if you are getting a late start with savings for a child’s college education, you may need to utilize a combination of college education savings vehicles, possibly your own investments and savings, and/or financial aid (higher education loans, grants, and scholarships).
Finally, use the information you gain about college savings plans to find the best fit for your situation. Consider the age of your children - if they are young, you have more time to plan. If college is approaching, look into different school options - in-state or out-of-state. Keep in mind that out-of-state schools tend to be more costly. Take the time to research and determine the costs, ensuring you maintain a realistic perspective on what is affordable for you. While higher education can be expensive, there are affordable schools available that can accommodate your budget.
From your perspective, how early would you recommend parents start saving for their child’s education?
If you have the ability to save for your child’s college education, then starting as early as possible makes the most sense. If you are using a college savings plan, like a 529 plan, the more time you have, the more time your underlying investments have to grow hopefully before they need to be used. However, some individuals may want to focus on building their retirement nest egg, creating an emergency fund, and/or paying down or off school loans or other debt prior to embarking on a college savings plan. I believe the key is to choose the approach that you are most comfortable with, and which makes the most sense for you, financially.
Investments offered by 1900 Wealth are not FDIC insured, may lose value and are not bank guaranteed.
Information provided is for general purposes only and is not intended to be a substitute for specific individualized tax or legal advice. Please consult a qualified tax professional or legal advisor. 1900 Wealth is does not provide tax or legal services.
Before investing in a 529 plan, carefully consider the plan’s investment objectives, risks, charges, and expenses. Units of 529 plan portfolios are municipal securities and may be subject to market volatility and fluctuation. 1900 Wealth is not a 529 plan provider.
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