The Monday Consult: Saving for college
Last week's post on a coming dip in the college population prompted Robert to ask for a consult on how to save for college. It seemed to me a particularly good topic in light of our economic woes.
I asked Christopher Brown, president of Ivy League Financial Advisors in Rockville, to give us five tips for saving for college right now. Here are his thoughts:
--Have a conversation with your spouse. If you haven't already, parents need to have a heart-to-heart about what kind of education they're saving for. "What rate do you want to save at – public or private? How many years do they want to save for?" Brown says, noting that many students do not finish college in four years. "There's no right or wrong answer; it all depends on the situation."
--Pick a target number. Though it may be scary, you need to know the ballpark figure you're shooting for, once you've established what kind of education you're funding. Calculators can be found at savingforcollege.com and collegeboard.com.
(Photo of Christopher Brown courtesy of Christopher Brown)
(Click below for more of Brown's tips...)
--Pick a savings vehicle. Brown thinks 529 savings plans are still a great option because of the tax advantages they offer; if you're worried about the economy or have a child close to college age, choose a more conservative allocation.
--Make a plan for regular savings, and stick to it. Automatic monthly deposits, for example, will help even out stock market bumps. "Try not to obsess about what's going on in the market on a daily basis," Brown says. "If children are under 10, that market volatility is going to work itself out."
--Don't skimp on saving for your own retirement. "We always tell clients that while we understand that they want to be good parents, that kids will always find a way to go to school, but nobody's ever going to lend them money to retire," Brown says.
I'd love to hear how you are going about saving for college -- or from parents who've already survived the experience. Please post your comments below.
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Comments
When we found out I was pregnant with our son 4 years ago, we started purchasing education bonds through our company. Every month, we get a couple hundred dollars worth in my husband and my name that we are saving for our now two children for college time. By the time they are 18, we will at least have a good start on their first couple years in school.
Posted by: Christine the ram :) | March 31, 2008 9:48 AM
This is sort of unrelated, but I just read recently that if you can't save enough for BOTH college and retirement, you should always choose to save fr retirement. Your kids can always finance college with loans. You can't say the same for retirement.
Posted by: Kayris | March 31, 2008 2:02 PM