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In Case Junior Doesn’t Get a Scholarship
Unique programs make saving for college a little more realistic
By Debbie Swanson
School years have a way of rolling by, and before you know it, you’ll be attending college fairs and awaiting acceptance letters. How will you afford a college education for your child? Experts agree: Start planning sooner rather than later.
What are your options?
“The most important thing is to start saving, and move past that initial hurdle of putting aside something each month,” advises Jessica Hipp, communications manager at Massachusetts Educational Financing Authority (MEFA).
MEFA’s UPlan offers parents the unique opportunity to purchase tomorrow’s tuition at today’s rates. Your contributions enable you to purchase a percent of your child’s tuition at its current rate. Your purchased percent remains fixed, despite increases in tuition. When your child is ready to enroll in college, the percent you have purchased is applied to the schools’ current rate of tuition.
Hipp offers a simplified example: “If a college costs currently $10,000 and you contribute $1000, you have purchased 10 percent of your child’s tuition. If you contribute $2000, you have purchased 20 percent.”
UPlan savings can be applied at any of 80 participating Massachusetts institutions. If a student wishes to go elsewhere, they can withdraw the principal investment with interest.
Another savings option is UFund, a 529 plan jointly offered by MEFA and Fidelity Investments. A 529 plan is tax-advantage savings plan designed to be used for higher education. Parents can make regular contributions at a minimum of $15 per month, or open an account for $50 and then contribute on an ad-hoc basis. Once their child reaches college age, monies accumulated in UFund can be used toward tuition and fees, as well as other college-related expenses, such as books.
Other savings opportunities include UPromise, a program where you earn college savings from purchases that you are probably already making.
“UPromise is a great way to increase college savings just by being a smart consumer,” says Deborah Hohler, spokesperson for the Newton-based company.
After signing up, every time you make an eligible purchase, UPromise’s partners return a portion of your spending to your UPromise account. Partners range from on line merchants, restaurants, grocery and drug stores, and more. For a complete list, look at their Web site www.upromise.com, where you will also find coupons and special deals.
Earned funds accumulate in your Upromise account until you are ready to apply them toward college expenses. At that time, your options include transferring them to a 529 plan, using them toward a Sallie Mae student loan, or receiving a check.
In addition to your everyday spending, Hohler points out that there are many ways for members to boost their UPromise balance.
“Extended family or friends can sign up with UPromise and choose any beneficiary for the account,” she states. For example, grandparents can open an account and designate one or more grandchildren as beneficiaries.
“On our Web site, you can access a link for guest shopping,” Hohler adds. “When doing online shopping through this link, or by sharing this link to family and friends, your online purchases can contribute. This is helpful, especially during the holiday shopping season when people are spending money anyway.”
When traveling or making large purchases, planning ahead can boost your UPromise potential. “Airline tickets, car rentals, hotels, or even when buying or selling a home, can turn into college savings for members.”
“Since we began, our members have saved over $500 million toward their education,” says Hohler.
It may seem like an overwhelming hurdle, but taking comfortable steps when your children are young is the best way to get started toward college savings. Even a small monthly savings started early will result in that much less your future student may need to borrow.
See these websites for more information:
Callout: Look for Start U.Reading events at libraries in your area. These fun, literacy events hosted by MEFA will inspire your child’s love of reading, while they enjoy meeting a special guest.
Painless Ways to Stash some Cash
· Do your children need another carload of toys at the holidays? Suggest family members donate to your child’s savings instead.
· When you pay off a regular payment – such as a car loan – re-route all or a portion of that money into a college savings account.
· Each year, deposit a percent of your tax refund into a college savings account.
· Teach good habits: Suggest your child save some of her own money toward college, and offer to match her contributions.
· Make monthly savings automatic by signing up for payroll deductions.
