While most saving options, including those mentioned in this article, are parent-focused, students can also save for college. If you’re a student who works, you can set aside some of your earnings to help with your tuition or other college costs. The earlier you start saving, the more money you’ll have to help pay for college.
How do I open a traditional savings account?
Traditional savings accounts are a great way to save for college while still having access to your funds. They’re especially good for students, helping you set aside money from work or gifts with the intention of using it for school.
You can open a savings account online or in person at a bank or credit union with some basic information about yourself. Take the time to shop around, as there are many savings accounts offering different interest rates, minimum balance requirements, and varying levels of fees. When you’re ready to open one, be sure to have your Social Security number or an Individual Taxpayer Identification Number (ITIN), two forms of identification, and proof of address (such as a piece of mail showing your name and address).
Should I save money from work to pay for college?
Whether you have a part-time job during school or a summer job, any money you earn can help cover the cost of college. Look at your budget, and consider if it’s possible to save some of your money. Saving even a small amount from your paycheck every week can help you cover some college-related expenses.
If you’re a parent, it’s never too soon to start thinking about your child’s college education. College can be expensive, so saving now is a great way to set your child up for success in the future. Let’s explore some questions you and other parents may have about saving for college.
Is it too early to save for college?
It’s never too early to save for college. Starting a college savings plan early in your child’s life is a great way to plan for their future and gives you more time to save.
Is saving for your child's college education worth it?
The benefits of saving for college outweigh the potential impact on the amount and type of financial aid you may be eligible to receive. For most students and families, savings has only a small impact on their aid eligibility. Check out the Federal Student Aid Estimator for a better idea of how much federal financial aid may be eligible receive.
What are college savings plans?
College savings plans are investment accounts that help you save money for your child or children’s college costs. These accounts give you different options to save and invest your money to grow the balance over time, with certain tax advantages when used for qualified educational expenses. Two common college savings plan options are the 529 plan and the education savings account).
What is a 529 plan?
A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs. The 529 plans, legally known as “qualified tuition plans,” are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code.
There are two types of 529 plans: education savings plans and prepaid tuition plans. Most education savings plans are available to everyone, but a few have residency requirements for the saver and/or beneficiary. Prepaid tuition plans typically have residency requirements. One exception is a prepaid tuition plan sponsored by a group of private colleges and universities.
What is an education savings account?
Education savings plans let a saver open an investment account to save for the beneficiary’s future qualified higher education expenses. Qualified higher education expenses include tuition, mandatory fees, and room and board. Withdrawals from education savings plan accounts can generally be used at any college or university, including sometimes at non-U.S. colleges and universities. Education savings plans can also be used to pay for other education-related expenses.
How do I use a traditional savings account to save for college?
If you’d like to save money for college without limiting access to your funds, a traditional savings account could be a good option for your family. Many banks and savings apps let you automatically transfer money from your checking account to your savings account, which can make saving for college with a traditional savings account even easier.
Saving even a small amount of money for college can be beneficial. No matter when you start or how much you’re able to save, it all adds up.