In the next two weeks my high school senior should hear if she was accepted into her number 1 and number 2 college choices. While my husband and I started saving for college when she was a baby, we simply weren’t able to put enough away to cover college tuition out of pocket. We will figure out a way to finance her college education. (I still like my “make college tuition tax deductible” idea that I’d presented in my Marketplace Money radio essay that broadcast earlier this year.)
With college costs rising at 8% annually, experts at GradSave.com, which offers a college savings registry, agree that saving for college is crucial for today’s youth to be able to attend college. That said, there are many factors that contribute to a successful savings strategy.
One of the most important factors in saving for college is utilizing a 529 college savings plan, sometimes referred to as a 401(k) for kids, which accrues interest over time and is tax-deductible. Both of our daughters have 529 plans. Every paycheck we have a small amount taken out and deposited into their accounts.
The folks at GradSave shared with me this awesome infographic that pretty much spells out the why and how for saving for college.