Smart strategies for saving for college and the future

Planning for your kids’ college years is a big task — but with good strategies at play, it’s absolutely manageable to get started planning for college and beyond. It’s never too early (or too late) to start saving for college and establishing a bright future. In fact, saving for college for your young ones can start in infancy — or even before they’re born.

How to financially prepare for college

The first step in saving for college is understanding the many costs involved. Tuition is simply one of the pieces of a much larger puzzle — don’t forget about room and board, books, transportation, and personal living expenses.

Start early: The earlier you start saving up for post-secondary education, the more time your money has to grow. Even small, consistent contributions can make a big difference over time. 

Set a goal: Use online calculators to estimate future college costs and determine how much you’ll need to save monthly to reach your target. Working toward this goal consistently will keep you on track. And if you fall a little short, student loans might be able to cover the rest.

Create a dedicated savings plan: Keeping college savings separate from other funds helps you stay on track and avoid dipping into it for other expenses.

What are your college savings options?

There are several ways to save for college, each with their own features and benefits:

• 529 College Savings plans*: These tax-advantaged accounts are specifically designed for education expenses. Earnings grow tax-free, and withdrawals are tax-free when used for qualified education costs.
• Custodial Accounts (UGMA/UTMA)*: These accounts allow you to save and invest on behalf of a minor. They offer flexibility but may impact financial aid eligibility.
• Traditional or high-yield savings accounts: While not tax-advantaged, these accounts are simple and accessible. High-yield options can offer better returns than standard savings.

What’s the best fit for college options?

Choosing the right college path can significantly impact your financial planning. Let’s take a look at how the different options compare.

4-year vs. 2-year colleges

• 2-year colleges (community colleges) offer lower tuition and the option to transfer to a 4-year school later. It’s a good way to get the required general classes out of the way before diving deeper into studies for a choice of major.
• 4-year colleges provide a traditional college experience and broader degree options but often come with higher costs.

In-state vs. out-of-state tuition

• In-state tuition is typically much lower for residents.
• Out-of-state tuition can be double or more, though some states offer reciprocity agreements.

Private vs. public colleges

• Public colleges are generally more affordable, especially for in-state students.
• Private colleges may have higher sticker prices but often offer generous financial aid packages.

Other ways to pay for college

While saving is key, again it’s just one piece of a much larger puzzle. Other ways to pay for college include:

• Grants and scholarships (free money!)
• Work-study programs
• Student loans
• Part-time work
• Family contributions
• Roth IRAs
• Prepaid tuition plans
• Borrow against a 401(k)
• Use a HELOC
• Employer tuition assistance, if available
• ROTC programs for those committing to military service
• GI Bill for eligible veterans, service members, and their families
• Borrow against the cash value of a permanent life insurance policy

Saving for college doesn’t need to be daunting. With a clear plan, the right tools, and a little consistency, you can set your child up for a bright future — without sacrificing your own financial well-being. Ready to start saving? Explore our college savings accounts or speak with a UBT banker today to find the right plan for your family.