For many Americans, the cycle of debt is starting earlier and earlier in life. With college tuition, room and board, and various expenses incurred over 4 years in school, students are often left with mountains of debt before they even start their first job.
To stop this cycle of debt before it starts, here are some great plans to start building that college savings program years before the kids have to think about which classes to choose.
Traditional Savings Plans
They say it takes a village to raise a child. So therefore when you are faced with requests from family members and friends asking what toy to give your child for their birthday and other holidays, you can ask for help contributing to their education. A few gifts of $10 or $20 from several people a few times a year can really add up over 18 years, when saved in high-interest accounts.
When your kids are young, it is a great time to start putting aside a small amount each month towards their education. While it may feel like an added expense at the time, you’ll be thanking yourself in a few years that you didn’t have a need to clean out your 401k to fund their tuition.
These tax-saving investment plans are a great way to save for tuition at a high-interest yield. There are no age or income restrictions, so you can virtually jump into these programs at any time prior to your child entering college. Here is a comparison of some of the best-performing 529 plans for your review.
These plans are similar to credit card miles/points programs. Simply register your credit and debit accounts on Upromise.com, and each time you make a purchase from one of their partner retailers (including Best Buy, Target.com, and Bed, Bath & Beyond), you’ll receive a percentage of money back toward tuition payments, a 529 plan, or an existing, eligible student loan.
Tax breaks can often be as good as cash in hand. If you are currently making tuition payments, you may be eligible for The American Opportunity and/or Lifetime Learning tax credits. Once you receive these credits, it is usually best to reinvest the cash value into your existing college savings account to cover current or future expenses.