The average cost of college in America is $20,770 for public in-state schools, and $46,950 for nonprofit private schools, according to ValuePenguin. But don’t let those numbers send you into a tailspin and digging for quarters under your couch. EGÉA SRI has your guide for college savings. If you have been looking for a sign to start saving for college, whether it’s for yourself, your child, or your grandchild, consider this your sign!
Whether you have a brand-new baby or a teenager considering the next step (or a grandchild, or a niece, or a nephew, or anyone you love), it is never too late to start saving for college. At EGÉA SRI, we are here to help you through every stage of life, from saving for college for a child to sustainable 401ks and the best sustainable Roth IRAs.
Consider this your guide to college savings with all the information you will need, from details about 529 plans to how much to save for college. Along with our sustainable portfolio management services, we also offer a variety of other financial services.
Your Guide to College Savings
The estimated cost of putting a baby through college in its entirety 18 years from now is approximately the equivalent of buying a median-priced home today for all cash. For many families, that can cause panic, especially with inflation so high in the U.S. right now. And families with multiple children can panic even more.
But on the flip side, no one wants their child to begin their education and adult lives saddled with thousands of dollars in student debt. While saving for college might seem daunting, that is what the experts at EGÉA SRI are here for. Sadly, there is no class in college that teaches parents how to save room in the budget. And on top of a mortgage or rent, child care, health insurance, and other bills (perhaps even a student loan or two of your own!) it can be hard to find room in the budget.
If you are still undecided about how to save for college, you are not alone. While 64% of parents are either saving, planning, or doing both for college, that means 36% of parents are neither planning nor saving, according to statistics from the Education Data Initiative.
While it is never too late to start saving for college, we do recommend you start as early as possible. If you can afford to save even a little, it’s a good idea. While we are known for sustainable investing, at EGÉA SRI, we offer help with every aspect of investing and financing for your future.
Best Options for Saving for College
College savings might seem overwhelming. But in your guide for college savings, we have compiled some of the many options available to help you save for your child’s education. These are some of the best college saving plan options available. One of these options might be the right choice for your family.
Open a 529 Plan
One of the most popular options for college savings is a 529 plan. A 529 plan is a tax-advantaged savings plan designed to pay for qualified education expenses for a designated beneficiary. When you use the money for college, earnings and withdrawals are completely tax-free.
Try a Coverdell Education Savings Account
The Coverdell Education Savings Account (previously known as the Education IRA prior to 2002) is similar to the 529 plan. Both permit tax-free interest earnings and withdrawals for qualified educational expenses. However, these savings accounts are not available to every family and have lower maximum contributions than other college funds for kids.
Put Money Into Eligible Savings Bonds
U.S. savings bonds are one of the safest investments. These are debt securities that are issued by the Department of Treasury.
Start a Roth IRA
If you’re thinking, “wait, isn’t a Roth IRA a retirement account?”, you are correct. A Roth IRA is a retirement account that lets you contribute after-tax income to earn interest tax-free. However, you can withdraw the funds after you turn 59 tax-free and without penalty. Taking them out for college is considered untaxed income to the beneficiary.
Mutual Funds
Mutual funds are diversified investments that are managed by a financial advisor or bank investment specialist. They allow you to invest your money in several different securities, including stocks and bonds. You can spend the money you save in a mutual fund on anything, including college and other education expenses.
Custodial Accounts Under UGMA/UTMA
A custodial account is a brokerage account opened by an adult on the behalf of a child. The funds can be diversely invested, in stocks, bonds, or mutual accounts. Typically, the account is held by an adult and then transferred to the child once they reach a certain age. You can spend money in a custodial amount on anything (for example, in case your child doesn’t go to college.)
How Much to Save for College
While there are many different rules out there that tell you how much you should be saving for college, we find that everyone is different. There are several factors that affect how much you need to save for college. Your own college savings goal might differ from someone else’s. For example, are you covering tuition or all expenses related to college? Would you like your child to shoulder some of the financial responsibility of schooling on their own? How much are you able to save without hurting your own finances?
Find Your Guide for College Savings at EGÉA SRI
At EGÉA SRI, we are known for being one of the best firms for sustainable investing. But we are here to help you with your financial needs through every stage of life. We can help you create the best college savings plan for you and your family. Without knowing you personally, we can’t tell you the ideal option to help you save for college. Contact us today to set up a free consultation with your own chartered SRI counselor who can help you begin saving for college and any other financial goals you wish to achieve!
Disclosure:
Socially Responsible Investing (SRI) / Environmental Social Governance (ESG) investing has certain risks based on the fact that the criteria excludes securities of certain issuers for non-financial reasons and, therefore, investors may forgo some market opportunities and the universe of investments available will be smaller.
This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.
