Saving for College

College tuition and expenses are costly and expected to continue to rise. Planning ahead is the best strategy parents can use to be prepared for this stage in their child's life. Here are some tips that can help in this planning:

  • Start saving early. Don't wait until your child is in high school to start considering the possibility of college. Putting aside money for 18 years will help a great deal.
  • Stocks and mutual funds are great ways to build savings for the long term. These tend to yield higher returns than some other options.
  • 529 plans offer taxpayers a tax deduction for contributions and account earnings grow tax-free. There are no federal taxes and, for North Carolina taxpayers, no state taxes on earnings either. Check out http://www.cfnc.org for more information on NC's 529 plan.

For those that come up short when it is time for college, there are many grants and college loan programs available. Lenders tend to be more flexible when it is time to pay back college loans offering lower interest rates and longer lengths of time to pay loans back. Taxpayers paying back student loans also get a tax break

Source: http://money.cnn.com/magazines/moneymag/money101/lesson11/index.htm