College savings: How and when to save
When it comes to saving for a college education, it's true that the earlier you start the better. But no matter where you fall in the savings process, you can gain the tools, knowledge and guidance to lead you down the right path.
The Cost of Waiting
Saving for college can seem overwhelming. Many people take a "wait until we can afford it" approach. But doing nothing or waiting to start saving can be costly. Starting now can reduce the burden of borrowing later.
Understand the costs
Parents who have a full understanding of costs and are actively investing are better positioned to avoid or minimize college debt.
Start saving now
Even if you feel like you've fallen behind in saving for college, start today. Waiting even one year will cost you in the long run and will force you to rely more heavily on loans and your current income.
Know your options
You can use savings, current income and loans to pay college bills, but relying on these alone can be costly. Tax refunds and bonuses can also be used to make additional contributions.
Financial Aid: Understanding the System
One of the biggest misconceptions about saving for college is the impact assets may have on financial aid qualifications. Families may be surprised that the amount they're responsible for is determined mostly by parental income, not parental assets.
The impact of income
Family income makes a large difference on expected family contribution (EFC), and assets, such as money in a 529 plan, actually make a minimal impact.
Determine your needs
Financial need is the difference between the EFC and the cost of attendance. There's no guarantee that financial need will be fully met by a school's financial aid package.
Reaching your EFC goal
There are ways you can prepare for this cost such as opening a separate savings vehicle, applying for merit-based grants or leveraging advanced gifting strategies.