How to Save for College: Tips for College Savings Month and Beyond

It's September, and while the leaves are turning, our thoughts are also turning towards the future—especially when it comes to saving for college. September is National College Savings Month, a reminder to plan early for college expenses. And today’s rising tuition costs make it even more crucial to start saving as soon as possible. Whether you are a parent wanting to provide the best for your child or a future college student preparing for the next chapter, we've got you covered. Keep reading to learn how to save for college effectively. Let’s begin!

1. How to Get Started: Setting Up a College Savings Plan

Building a savings plan is like planting seeds for your financial future—it’s rewarding and grows over time! Let's start with some simple ways to stay on track and reach your savings goals.

Percentage of Paycheck Allocation

One of the best strategies involves setting aside a specific percentage of your paycheck and depositing it into a dedicated college savings account—experts suggest 10-15% of your income. The key here is consistency, which is why we recommend setting up automatic account transfers to help keep you on tack.

Saving Cents Program

Imagine if every time you made a purchase, you could save a little extra without any effort. That's the idea behind Academy Bank's Saving Cents program. By rounding up your debit card purchases to the nearest $1 or $5 and saving the difference, you can gradually build a robust savings fund over time. It's a simple yet effective way to boost your savings without making major changes to your spending habits.

Utilizing Financial Calculators

Sometimes, figuring out how much you need to save for college can seem like a complex math problem, and in many cases, it actually is a complex math problem. That's where financial savings calculators come in handy. Specifically, tools like College Savings Calculators can help you fine-tune your education savings plan and provide estimates based on your financial standing and goals.

2. Top College Savings Options for Students

Whether you're just starting to save or looking to maximize your existing funds, there are several strategies available to help students reach their college savings goals.

After-School and Summer Jobs

Taking on part-time work during the school year or over the summer can really help grow your college fund. Not only will you gain work experience for your resume, but you'll also gain some financial independence. And while balancing work with academics and extracurriculars might seem tough, the benefits can be huge.

Savings Accounts for Students

Opening a student savings account is an excellent step for young adults looking to save for college. Academy Bank's Student Savings Account, for example, is designed for individuals under the age of 23 and offers interest that compounds quarterly. This means your savings can grow faster over time.

TIP: Compare interest rates and perks across different banks to help you find the best savings account to maximize your funds.

Apply for Scholarships

Scholarships can be a hidden gem when it comes to funding college. Applying early and often can really lighten the financial load of higher education. Keep an eye out for scholarships that align with your academic achievements, extracurricular activities, and community service. There are plenty of websites and organizations with searchable databases to help you find scholarships  that suit students perfectly.

3. Best College Savings Options for Parents

Planning ahead for your child's education can make a big difference when it comes to managing college expenses. Here are some strategies for parents that might ease the financial burden:

Savings Accounts for Parents

Parents have some great options for saving for their kids' college tuition, like money market accounts and certificates of deposit (CDs). Money market accounts, such as those from Academy Bank, offer better interest rates than regular savings accounts, making them useful for long-term savings. CDs are another solid choice, providing a fixed rate of return over time, so your money grows without a hitch.

Spending Less and Reevaluating Budgets

One of the best ways to boost a college savings fund is by reevaluating your current spending habits. Do you really need Starbucks each day? It’s amazing how small adjustments can lead to significant savings over time.

Go through your monthly expenses and identify areas where you can cut back. For example, a simple way to save is by looking at your lunch spending. A recent US Foods survey  revealed that the average American spends $166 monthly when dining out. This adds up to nearly $2,000 each year that could be funneled into college savings fund instead. To evaluate your own lunch spending, we suggest using a Lunch Savings Calculator.

529 College Savings Plan

When it comes to saving for college, 529 plans are a popular choice due to their tax advantages and flexibility. Your contributions grow tax-free, and when it is time to pay for qualified education expenses, withdrawals are tax-free too! These plans can cover a range of educational costs, including tuition, room and board, and even some K-12 expenses. It's worth noting that each state offers its own 529 plan, so make sure you compare options to find the best fit for your needs.

4. Financing College Education with Loans

Paying for education expenses with loans is key to helping students focus on their studies instead of worrying about money. Here are some go-to loan options for college:

Student Loans

While saving is ideal, sometimes it's not enough to cover all college expenses. In such cases, student loans can fill the gap. The most popular choice is federal student loans because they typically offer lower interest rates and more flexible repayment options compared to private student loans. You can start by completing the FAFSA(Free Application for Federal Student Aid) as your first step. Once submitted, you can explore different federal student loans options.

TIP: Make sure you understand the terms and conditions. Remember to borrow only what you need to minimize debt.

Personal Loans

When student loans fall short, personal loans can be an alternative. These loans can cover any remaining education costs like books, meals, and a new laptop, but they generally come with slightly higher interest rates. Also, personal loans for college often have quicker disbursement compared to student loans, providing fast access to funds when you need them.

Why Academy Bank is the Top Choice for College Savings

Starting early and being consistent with your savings can make a world of difference when it comes to affording college. College Savings Month is a great time to kick-start your college savings goals! But remember, keep saving beyond this month to make sure you are ready for the future.

Let Academy Bank be your tutor for college savings strategies. We offer personalized service and a range of products designed help you navigate life’s big milestones:

• Financial calculators to assist in effective planning
• Saving Cents¹ to help you save effortlessly
• Student savings accounts² designed to support young savers
• Money market accounts³ and CDs⁴ with competitive interest rates
• Personal loans⁵ to help you cross the finish line

With the right strategies and a little motivation, you're well on your way to making your education dreams a reality. Get started today!

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¹ Choose from $1 to $5 increment to round up on your debit card purchases from your checking account. Each night all the extra change will automatically transfer from your checking to your savings.

² $25 opening deposit required. $5 paper statement fee applies. Interest begins to accrue no later than the business day we receive credit for the deposit of non-cash items. The interest rate is subject to change daily. If the account is closed prior to the interest payment date, no interest will be paid. Fees may be charged to the account which could reduce earnings on the account. Closing a new savings account within 90 days of opening will result in a $25 early closure fee.

³ $25 opening deposit required. $5 paper statement fee applies. A monthly service charge of $10 will be imposed every month or statement period if the balance in the account falls below $1,000 on any day of the month or statement period. Six (6) transactions per statement allowed. Closing your account within 90 days of opening will result in a $25 early closure fee.

⁴ $500 minimum opening deposit to open. A penalty may be imposed for early withdrawal. CD rates are subject to change at any time and are not guaranteed until CD is opened. Fees charged to the account could reduce earnings on the account.

⁵ Subject to credit approval. Restrictions Apply. Direct deposit relationship required. Origination fee, 10% or $100 whichever is less. Annual Percentage Rate (APR) is based on credit score. Only one personal loan allowed to any borrower at any time. Loan terms are based on the loan amount.