In a landscape where the cost of college has increased by 42 percent over the past 10 years at public colleges and over 31 percent at private nonprofit universities, there is no doubt that sending a child to college is among the most expensive endeavors a family will face.
During National Financial Literacy Month, the Connecticut Higher Education Trust (CHET) is encouraging parents to save for college early and offering a top five tips list:
Saving early. It’s easy to put off to tomorrow something that seems so far way, but the time between bringing your baby home from the hospital and sending him/her off to college is closer than most parents realize. It’s never too early to start saving for your child’s college education. In fact, the earlier the better. The ideal time to begin saving is between birth and age five in order to allow your investment to build over time.
Choose the right plan. Not all savings plans are created equal. While any savings and investment vehicle can be used to save for college, only a CHET 529 direct-sold college savings account carries tax benefits for Connecticut residents. A Connecticut taxpayer can annually deduct up to $5,000 if single and $10,000 if filing jointly and account earnings grow Federal and Connecticut income tax-deferred until withdrawn.
Set a goal. Parents need a goal versus blindly trying to anticipate how much college is going to cost. To set a goal, parents need to understand how much college will cost when their children are ready to attend. CHET offers an online College Savings Planner that allows parents to calculate how much they need to save and provides a personalized planner to guide their savings. Visit http://www.aboutchet.com/planning/howmuch.shtml to access this tool.
Stick with the plan. While all parents know saving for college is important, sticking with a savings plan can be hard. In a recent survey conducted by CHET, 80 percent of Connecticut parents say they find it difficult to save for college, with 60 percent citing too many other bills as the biggest barrier to saving. Parents who are disciplined enough to consistently set money aside for college will see the greatest success. One way to ensure you stay on track with your college savings plan is by setting up automatic deposits. Deposits can be in any amount and ensure that money is put aside on a regular basis.
Enlist your family and friends. The saying “it takes a village” to raise a child easily applies to saving for college and parents are hurting themselves and their children when they fail to seek assistance. Friends and family can make significant contributions to a child’s college savings account over time through birthday, holiday and graduation gifts. E-gifting makes it easy to contribute to a CHET account online and loved ones will appreciate the valuable gift idea. As your children get older, they too should be encouraged to contribute to their college savings account.
direct-sold 529 college savings plan was established in 1997, and as of March31,
2014 has grown to more than $2.1 billion in assets and more than 93,000
accounts. Connecticut State Treasurer Denise L. Nappier serves as Trustee
The plan manager is TIAA-CREF Tuition Financing Inc. For more information about CHET, visit www.aboutchet.comor call the customer service center at (866) 314-3939. Find us on Facebook(facebook.com/CHETcollegesavings) or follow us on Twitter (@CHET529).
Consider the investment objectives, risks, charges and expenses carefully before investing in the Connecticut Higher Education Trust (CHET) 529 College Savings Plan. Please visit www.aboutchet.com for a Disclosure Booklet containing this and other information. Read it carefully.