Beyond the Piggy Bank: The Best Way to Save for College Now
This blog post will look at the crippling byproducts of the student-debt crisis on women and how to plan for an educational future.
This blog post will look at the crippling byproducts of the student-debt crisis on women and how to plan for an educational future.
Beyond the Piggy Bank
“The ability to read, write, and analyze; the confidence to stand up and demand justice and equality; the qualifications and connections to get your foot in that door and take your seat at that table — all of that starts with education.” Michelle Obama.
Education in all its forms, helps us as a society advance.
But as we have heard so often in the news, education’s price tag steadily increases as the years go by.
More people attending a university are being forced to take out student loans, which has driven this country into one of the most alarming crises of student debt ever-- and many of the people affected are women.
According to the Atlantic in the fall of 2017, “women comprised more than 56 percent of students on campuses nationwide, according to the U.S Department of Education. Some 2.2 million fewer men than women will be enrolled in college this year (2018). And the trend shows no sign of abating.”
With more women attending college nationwide, it is important to talk about the student debt crisis and ways to mitigate its effects on women and their livelihoods.
Since we know that taking out student loans can burden the borrower for up to 20 years, what can be done to make sure that does not happen? The simplest answer is to save. Just a 4 letter word, s.a.v.e may be easy to spell out and say, but that does not mean the practice of saving is any small feat.
Saving money is like climbing a mountain-- it’s journey is long and tiresome, filled with rocks, sharp edges, altitude changes, and environmental barriers. It can be difficult to feel your progress when you’ve had your last sip of water and the rock in your shoe nicked your heel, but if you turn around and soak in the vast landscape before you, you’ll realize that each step brings you closer to the top, to a beauty you could never have foreseen.
The best time to start saving money is when your kids are at a young age. By establishing a practice of saving, you will be better prepared to help support your children in their educational endeavors.
So how will you climb the mountain and achieve your education savings goal? One way is to frame your educational budget in the context of your long-term savings goals. This goal-oriented mindset will put saving for education as a mission-- something grounded in value and meaning to you and your family.
When you create ‘big’ financial goals for yourself, it is always good to break that goal down into smaller, more manageable segments. In order to do this, think about the fixed expenses that will have to be factored into your education budget.
After you think through the fixed expenses and are able to put a number on what you want to save, it is time to look into the best places to store your money. One popular option is a 529 plan.
A 529 plan is a tax-advantaged savings plan sponsored by a state agency. This investment allows you to grow the account tax-free. The account is funded with after-tax dollars, but the money that accrues in your account grows on a tax-free basis and any withdrawals made from the account are also tax-free.
529 plans are really useful investments as they can help you achieve your educational savings goal if managed appropriately. All funds in this account must be withdrawn for educational purposes only, and if used in another capacity you would be looking at a 10 percent fee.
Beyond establishing an account for college savings, a 529 account can be a great agent for your estate planning. Picture this: you are a grandparent, and you want to be involved in helping your granddaughter save for college. You can do this by opening up a separate 529 account and choose the savings method most appropriate for you.
Though the account is managed by one person, it is important to think about who you would elect to be the successor of the account. Think about this matter strategically, and choose a like minded person who would handle the money according to your wishes and original intention. Having a plan for a successor is really important in estate planning and so is taking all of the steps to ensure the money you have put into the account will be used in the way you envisioned it.
Education, especially for women, is something to be celebrated. Let’s keep prioritizing educational advancement for our daughters, and many generations of women to come.