The challenge of saving for college is a daunting one for many parents.
CPA Kenneth Hall of the New York State Society of CPAs discussed what parents and students should be doing Monday during News 8 at Sunrise.
“A good goal is to save around 25 to 50% of what you believe will be the cost of college,” Hall said. He recommends the following steps:
Start a Section 529 College Savings Plan. Most states (including NY) allow you to deduct 529 contributions from your state income tax — currently $5,000 for single and $10,000 for married filers. You can contribute more, and best of all it grows tax-free.
Offer 529 “contribution slips” in kids’ birthday party invitations. It might be tacky, but how many more plastic toys do parents need!
Grandparents can also open 529s for their Grandchildren.
Here are some money-saving tips for parents of high schoolers and their students:
- Encourage your teen to take college credit courses in HS. They actually can provide a head-start on college and save lots of money in college tuition in the process. A three-credit course at U of R costs over $5,800!
- Be mindful of social media profiles. Colleges look at these for both admission and scholarship decisions.
- Consider colleges in other states. You might be surprised by the incentives colleges offer to diversify their student body.
- Get ready for the SAT exam. Investing in Test Prep courses may pay off in admissions decisions.
- Start now getting excellent Letters of Recommendation from teachers/coaches/administrators. It could be worth thousands in savings as well.
Hall said parents of children already in college can still take cost-saving measures, including:
- Establish a monthly budget with the student.
- Determine personal/student covered expenses vs. parent-covered expenses.
- Encourage your student to look for deals on used books. Amazon has a thriving storefront that might save thousands over four years.
- Look at meal plans or the ability to opt-out if the student has other options.
- Review all insurance policies to make sure your student is covered for health, auto, and renter’s insurance. Also, check applicable laptop and cellphone warranties and insurance.
“Parents should keep track of all the spending and sources of money, such as college savings accounts. The tax return reporting of these can be tricky. Your CPA should be a part of the process. This can also save thousands of dollars.”
