College Savings 101: 4 Things Parents Should Know
If you’re a parent, chances are you have to make a lot of decisions for your family. And while we might not be able to help you decide everything (e.g., will you be making grilled chicken or spaghetti for dinner?), we are here to help simplify one of the most important decisions — saving for your child’s future.
Here’s the great news: there is no amount too small to make a positive impact in saving for the costs of college. In fact, most parents don’t anticipate footing the entire bill. According to Sallie Mae’s annual report, How America Pays for College 2021, the majority of parents only plan to cover approximately 45% of the combined tuition, room, board and ancillary fees. So, what does that mean for you? And what can you do to be prepared?
1. Get an education — about the costs of education
Tuition is a big-ticket item when it comes to saving for college, as it equates to about 50% of the total cost. Other expenses, such as dorm room, meal plan, books, supplies and technology, make up the other 50%, and they can add up fast.
Fun fact: Did you know that a student earning an associate’s degree from a Florida College is guaranteed admission to a State University in Florida? So, if room and board for four years is cost prohibitive, it’s worth considering your child starting out at a State College so that they can live at home the first couple of years to save money. The State of Florida offers 28 colleges and 12 universities, with the majority of Floridians living within 50 miles of an institution of postsecondary learning. In a nutshell, you’ve got options.
2. Develop a strategy…with room to grow
Saving for all four years of college can be a challenge for parents, which is why Florida Prepaid understands the importance of offering a variety of plans to fit every budget, along with a handy pricing tool that takes the guesswork out of calculating monthly costs.
Take the 1-Year Florida University Plan for example: It lets you buy one year of college at a time, and covers 30 university credit hours, or one quarter of the 120 hours required to earn a bachelor’s degree. It’s a great way to kick-start your college savings and ensure you’ll have that first year covered.
Added bonus: if you have family members who want to contribute, they can purchase a year too, to help you reach your savings goals even more quickly.
3. No need to put all your (college savings) eggs in one basket
At Florida Prepaid, we want you to be successful. We know there are a wide variety of ways to pay for college, and a 529 Prepaid Plan is simply one of them. Scholarships, grants and financial aid are all great opportunities to receive free money for college, with many only requiring a simple application. Some students work part-time during school, and/or take out student loans to help cover the difference.
At the end of the day, a diversified college savings strategy is often the most successful one. And remember: you don’t have to save for it all. Any amount you save today, means less debt for your child tomorrow. And that’s an amazing thing.
4. Prepay your path to savings success
Financial experts agree that 529 plans are the most efficient and effective way to save for college. And a 529 Prepaid Plan gives you the most flexibility and protection.
Say your child goes out of state —the value of your 529 Prepaid Plan travels with them. If they happen to receive a scholarship, congratulations! Our plans work great alongside scholarships and financial aid to help cover all the costs of college. And we certainly understand if things change and college ends up not being in their future, which is why our plans can be transferred to another family member, or canceled at any time for your money back.
Oh, and did we mention the 100% risk-free part? Your money is protected by the State of Florida, so you can never lose your investment. Also, if the cost of tuition and fees goes up more than originally projected, Florida Prepaid covers the difference. Guaranteed.
To help get you started, if you enroll in a 529 Prepaid Plan now through October 31, we’ll waive the $50 application fee. Just use promo code DREAMBIG21 when you open your account.