What’s the best time to start saving for college? “Now” is always your best bet, but it might be more true than ever this month.
College costs are mounting and the crushing student loan debt today’s kids could face in the future is a common worry for moms and dads across Metro Detroit and beyond.
“Many parents are still paying off their student loans, so they should understand the importance of trying to minimize what their children are going to have to take out in the future,” says Robin Lott, Executive Director of the Michigan Education Trust.
If you haven’t started saving yet, you’re not alone. But every little bit counts, Lott encourages.
“The earlier and the more they can save means there will be more money available for college when the child is ready to go,” she says.
Here are three compelling reasons to take action this month to save for your son or daughter’s college costs.
1. It’s tax time
The IRS tax filing deadline is Monday, April 18, which means many families will be getting a tax refund soon. It’s an unexpected bonus for many households and one that could easily be put toward your child’s college savings.
“It’s the time of year where you’re receiving some extra money in your budget, and what better way to begin saving for your child’s future by just using a portion of it,” Lott says. “Even if you didn’t use the whole thing.”
Kicking off a college savings fund is often a motivator for saving more.
“Once you get it started, perhaps you can motivate yourself to continue saving,” she says.
2. Contract prices are going up
The Michigan Education Trust offers Section 529 prepaid tuition plans that help families save for future tuition by buying college credits at today’s prices. The new Pay- As- You- Go option makes it even easier to save, since families can purchase just one credit hour to get started and then contribute in increments of at least $25.
But if you’re interested in this program, you should know that contract prices will go up by two percent on May 1. The new prices stay in effect through Sept. 30.
By getting in now, “you can maximize what you save,” Lott says.
“It gives you that last minute opportunity to buy credit hours at the old contract price,” she says.
3. Payroll deduction makes it easy
All of Michigan’s 529 college savings plans offer a payroll deduction option, in which a set amount can be taken directly from your paycheck and deposited into your child’s college fund. It’s a simplified way to save, Lott says, and the increments can be as low as $15 per pay period – less than you might pay for the data plan on your cell phone.
“I like to encourage parents that if you can afford a smartphone, you can afford to pay for college,” she says.
No matter which program you choose, it’s often just a matter of taking action – and there’s no better time than the present.
“I know many parents are plagued with procrastination. It’s something they want to do, but taking the time to actually do it is another thing,” Lott says. “It can be overwhelming to just get through the day-to-day parental activities or responsibilities, but it’s equally important to take time out to either begin saving for college or to add to your existing college savings.”
For more information, visit SETwithMET.com or call 1-800-MET-4-KID (638-4543).