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FDIC Consumer News Winter 2010/2011 Saving for College: Ways to Minimize the Sticker Shock
There's no doubt that a college education can be costly, but according to U.S. Census Bureau data, someone with a college degree can earn, on average, 60 percent more than a person with only a high school diploma. In our Fall 2010 issue, we looked at ways to borrow money for college. Now, as states tighten their belts and higher-education budgets are squeezed, we follow up with tips on saving for college. Start planning and saving for college as early as possible. "Small, steady savings — ideally starting as soon as possible after a child is born — can help parents manage the sticker shock of a college education," said Luke W. Reynolds, Chief of the FDICs Community Outreach Section. Estimate how much you need to save to meet college expenses. Several online calculators can help, including one from the U.S. Department of Education (go to www.studentaid.ed.gov and click on "College Savings Calculator"). Research your savings options. Some come with substantial tax benefits or other incentives. In each case, carefully consider the potential risks, costs and limitations before investing any money. Examples include:
There are two basic kinds of 529 plans: pre-paid tuition programs that allow savers to lock in today's prices for future tuition payments at designated universities, and traditional savings plans that allow families to contribute money into investments or FDIC-insured deposit accounts. Under the FDIC's rules, in most cases, deposits that a 529-plan administrator places at a bank on behalf of different individuals are federally insured up to $250,000 for each participant. For more information about saving and paying for college from the FDIC, the Department of Education and other government agencies, start at http://www.mymoney.gov/Fast/Pages/Results.aspx?k=Higher%20Education%20and%20Training&r=lifeevent |
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Last Updated 7/3/2014 |
communications@fdic.gov |