It’s no secret that the cost of education has increased significantly over the last few years. In New York State, the average cost of state university tuition has risen to as much as $36,052 annually for some students. These costs are a burden for any family, but even more so for families living in New York and across the Country. With that in mind, Bob Isaksen, Long Island president, Bank of America has some tips for parents beginning to save for their children’s education:
•Start Early: If you're considering starting a college fund for your child, one of the first options you should consider is a 529 account. Formally known as a qualified tuition program (QTP), a 529 is a tax beneficial plan to save money for college. This means that the earnings on the account are not taxed by the government, as long as the money is used exclusively for educational expenses. The plan won’t allow you to receive a federal income-tax deduction for your contributions, although they could be deductible on your state tax return if you invested in the plan offered by New York State. If you can start early and save over time, this is an opportunity to receive a tax break worth thousands of dollars. Speak with a financial advisor to learn more.
•Don’t Be Shy – Swipe!: One easy and convenient way to add to your 529 plan is through the use of credit cards that offer cash back rewards for college savings, such as the BankAmericard Cash Rewards™ credit card. Credit cards like these offer parents the ability to direct their cash-back rewards directly into their child’s 529 plan just by using their cards to purchase items like they normally would. These small, often 1-3 percent contributions per purchase may not cover the entire cost of your child’s education, but using one of these cards and making regular contributions helps you accrue a sizable sum over time.
•Use the Unlimited Resources at Your Fingertips: As you begin saving, remember that your local bank is there to help and has plenty of resources for you to take advantage of. This includes:
- Help understanding grants or financial aid your child might be eligible for
- Help with the Free Application for Federal Student Aid (FAFSA) form
- Advice on the best type of loan for each situation.
Online financial resources such as “Better Money Habits,” also provide information about subsidized loans versus unsubsidized loans and much, much more! Next time you visit your bank, ask and see what resources are available to you.
Whatever your financial situation is, it is never too early to begin setting money aside to start saving for your child’s education. Not every parent has the resources to begin saving immediately. However, the fact remains that many people still wait too long before they begin. If you are a parent that is starting to think about your child’s education and future, experts agree that it’s worth exploring a 529 plan and taking advantage of many free resources at your disposal!
