Governor Andrew Cuomo’s tuition-free college plan for SUNY and CUNY students whose parents earn less than $125,000 may take a while before it goes into effect. In this morning’s PIX Financial Fix, we’re going to show you how you can start saving NOW with help from Yahoo Finance reporter, Jeanie Kim.
BASIC TIPS TO SAVE FOR COLLEGE
- College tuition in 18 years is projected to be $200,000+ for four years at an average public college
- Save $450/month from the time your child is born
- Most parents save in regular savings accounts
- ⅓ of parents save for their kids’ college with 529 plans
- Instead of gifts, ask for college fund contributions
WHAT ARE 529 PLANS?
- 529 plans are education-specific investment accounts with tax benefits
- Earnings grow tax-free
- Withdrawals must be used for qualified college expenses
- You can change the beneficiary
- Plans have no income limit
- Very little impact on financial aid (many parents mistakenly think every dollar you save is a dollar less you’ll get in financial aid)
BEST 529 PLANS
- You can choose from any state’s plans
- Start with your own state as many states offer residents extra tax breaks
APPS TO HELP YOU STAY ON TRACK
- Scholly: helps you find free money by matching you to scholarships
- Collegeboard.org has a college cost calculator
For additional tips, read our story on how to start saving for college tuition.