College Planning

A Smarter Way to Save for College

While most parents want their children to go to college, many are not taking full advantage of the best ways to save, including 529s and basic planning.

Are You Saving for College the Wrong Way?

A recent study, How America Saves for College 2016, indicates that while more parents are saving for their child's college education, many are going about it all wrong.

Here are three ways parents may be missing out on getting the greatest value out of saving for college.

Saving for college using your savings account exclusively.

Many parents reported using a single type of college savings vehicle, with the most widely used being a general savings account. While using a general savings account isn't altogether a bad thing, it's not giving you some of the advantages provided by other types of savings vehicles, such as 529 college savings plans. In fact, the average savings among families using 529 plans was $7,534, compared to $6,043 for general savings account users.1 A better way to save for college might be to establish a college savings strategy that includes a mix of different types of accounts.

Not creating a college savings plan.

About four in 10 parents have established a college savings plan. According to the study, families who have a plan for saving for college saved on average $18,389- 76 percent more than the average amount of $10,468 saved by families without a plan. In fact, 95 percent of families who have a plan agree that having a type of road map ensures that college will be affordable for their child.

Failing to set a savings goal.

At the end of the day, you need to see where you are compared to where you need to be in order to reach your goals. By not establishing a specific benchmark, it'll be difficult to stay on track. The good news is that 88 percent of families, who set a savings goal, indicated that they were confident in staying the course as they continue to save money at established intervals. Start by realistically estimating college expenses, while accounting for scholarships, grants, and student aid.

For more information on how to save for college and the many benefits of 529 plans, visit the Protective Learning Center.

1. How America Saves For College, Sallie Mae, 2015

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All Learning Center articles are general summaries that can be used when considering your financial future at various life stages. The information presented is for educational purposes and is meant to supplement other information specific to your situation. It is not intended as investment advice and does not necessarily represent the opinion of Protective Life or its subsidiaries.

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Saving for College

Saving for college isn't easy. This article can help you better understand how to avoid three of the most common pitfalls when saving for college. For more information, visit our learning center.

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