In conjunction with this short and fun survey, they’ve also issued some tips on how families can help their kids get started on pursuing their career aspirations by being financially prepared for college. One in five American families with children who are likely to attend college name saving for higher education their top priority, according to How America Saves for College, conducted by Gallup and Sallie Mae. For the nearly half of those not saving for college, respondents reported that they do not know how (18%) or are not sure which are the best college savings options (28%). Sallie Mae offers these tips for families to help them get an “A+” for their college savings plans:
• Build a plan. First, understand the full cost of college and build a plan to save for it. Sallie Mae’s free Education Investment Planner helps calculate and compare future college costs at more than 5,500 college and graduate schools across the country and provides an age-based estimate of how much to save. It helps users explore the different ways to pay for college (based on savings, scholarships, grants and student loans) and helps families predict the student loan payments once the child graduates. Families can create a savings goal and set up automatic deposits of $25 or more a month or deposit money annually as budget allows.
• Start saving as early as possible in a dedicated college savings account. As mentioned above, most families save for college using two to three savings vehicles. Consider the following options:
o Build college funds tax free. 529 college savings plans are tax-advantaged ways to save for college, have no income limitations, and are easily transferable to another beneficiary if needed. Most 529 plans are sponsored by a state and many offer a state tax incentive or other benefits to residents (check 529.com for information on each state’s tax advantages). Family members can enroll in any 529 plan regardless of the state of residence without taxes or penalties. Earnings grow free of federal income tax as long as the withdrawals are used for qualified education expenses. Contributions to a 529 plan can be up to $13,000 ($26,000 if married filing jointly) a year or up to $65,000 ($130,000 if married) at once as long as no additional gifts are made to that beneficiary over a five-year-period.
o High-yield savings and Certificate of Deposit accounts: Sallie Mae’s savings and CD accounts are low-risk investment options with competitive interest rates (often one of the highest in the country), no monthly fees and no minimums. In addition, the high-yield savings accounts offer the ability to earn extra Upromise rewards to help your money grow.
• Save more with Upromise by Sallie Mae. Earn extra money for college through Upromise. Since its inception 10 years ago, Upromise members have earned $600 million in college savings, the equivalent of a college education for 20,000 students. Joining Upromise is free and rewards members for eligible everyday spending with hundreds of participating merchants and by making purchases with the Upromise World MasterCard. Earnings can be invested in certain tax-deferred 529 plans, deposited in a high-yield savings account, used to pay down an eligible student loan or simply request a check. Even friends and family can sign up.
• Give the gift of education -- especially during the holidays, birthdays and graduation. Sallie Mae’s How America Saves for College with Gallup found that 16 percent of families had help with college savings, with an average amount of $9,243 from family and friends. Thirteen percent of parents rely on gifts into college savings accounts as their primary way to save for college.
o Ugift with Upromise. With Ugift, gifts can easily be given directly to a child’s 529 college savings account administered by Sallie Mae’s Upromise Investments. Giving through Ugift has totaled more than $12 million since 2008.
• Put your employer to work. Check your benefits at work as many companies offer employees the ability to contribute to a 529 plan through ongoing payroll deduction.
• Kids can save too. Kids as young as school-aged can contribute to their future by setting aside money from a weekly allowance in their college savings account. Older kids can deposit earnings from baby-sitting, summer jobs or working part-time. It adds up over time and is an important reminder of their goal to attend college and a good lesson on saving.
My husband and I set up a college savings plan for our kids as soon as they were born! It’s never too early to get started. In fact, the earlier you start, the better. I hope you’ll give this some thought. And, in the meantime, be sure to take Sallie Mae’s quick survey about “What I Want to Be When I Grow Up”! As a thank-you, Sallie Mae is also offering the following gift for a reader of this blog!
www.surveymonkey.com/s/salliemaegrowupsurvey and fill out the quick survey. Then leave a comment on this post sharing what you and/or your child want(ed) to be when you grow up! You must do this to enter the giveaway.
After fulfilling the mandatory entry above, you can earn optional, additional entries if you:
- Follow @SallieMae and @ParentingAuthor on Twitter and tweet about this giveaway. You may tweet up to 3x a day. (Please space them at least an hour apart.) Leave a separate comment with the URL of each tweet. (1 entry per tweet)
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- Enter another current giveaway on Susan Heim on Parenting. (1 entry per giveaway entered)
One winner will be randomly selected from the qualified comments received by Thursday, July 14, 2011, at 11:59 PM ET. Please leave an email address on one of your comments if it’s not available on your Blogger profile. Winner must respond within 72 hours or another winner will be drawn. Contest is open to US and Canadian residents only.
CONTEST CLOSED. Congratulations to the winner, clynsg!
DISCLOSURE: I was not compensated for this post in any way. Thanks to Sallie Mae for providing the gift card for this giveaway.