When Saving for College, Parents Should Do Their Homework
BOSTON [March 17, 2015] - As students return to the classroom, college savings experts are encouraging parents to do their own homework and create a plan for how they will pay for their children's higher education. During College Savings Month in September, the Massachusetts Educational Financing Authority is providing expert advice to parents on successful strategies to save for college.
"The majority of parents want to help their children pay for college, and those with a plan do a much better job of actually saving for college. College Savings Month gives us the opportunity to encourage families to start saving for college, because small steps today can make a big difference tomorrow," said Martha Savery, Director of Public Affairs at MEFA, (www.mefa.org) the state authority on planning, saving and paying for college.
In Massachusetts, 94 percent of parents plan to pay all (17 percent) or a portion (77 percent) of the cost of college, according to the 8th Annual College Savings Indicator Study from Fidelity Investments and MEFA. However, just 50 percent of families say they have a financial plan in place to help them reach their college savings goals, according to the survey.
To help families get started, MEFA's staff experts recommend the following 10 steps to save for college:
- Develop a budget that includes a college savings plan.
- Use a notebook, spreadsheet, or smart phone app to track personal and household spending for a week to identify areas where you can cut spending and start saving.
- Save money on lunch. Make a double-batch of dinner & wrap up leftovers to take to work.
- Save for a short-term goal, like a family movie night. Show yourself that savings works, then aim higher
- Put one-time bumps in income, like work bonuses, monetary gifts, and tax refunds towards college savings.
- Create a separate savings accounts for different goals, like vacation, car maintenance, new appliances, retirement, and, especially, college.
- Start saving now. Use time and the beauty of compound interest to your advantage.
- Set up automatic transfers to your dedicated college savings account to guarantee that you'll save on a monthly basis.
- Get the word out and let your family know that they may contribute or open a college savings plan on behalf of your child. Have your child save too!
- Don't just set it and forget it. A few times a year, review your budget and your goals to see what's working and what isn't. Try to increase the amount you're saving for college each year.
The Massachusetts Educational Financing Authority (MEFA) is a self-financing quasi-public authority, not reliant upon state or federal appropriation, working to make higher education more accessible and affordable for students and families across the Commonwealth. MEFA's mission to increase access and college affordability is achieved through community education programs, financing expertise on planning, saving, and paying for higher education, and college savings and education loan programs. In its over thirty-year history, MEFA has assisted hundreds of thousands of families finance a college education. Follow MEFA on Twitter through @mefatweets and on Facebook.com/mefaMA
Public Relations Manager