Plan for College
Getting Started
The college process may feel overwhelming, but you can do it, and EFC members are here to help. College is an important and worthwhile investment. Find an expert in your state.
Why College Is Worth It
College remains one of the best investments you can make in your future. According to expert researchers at the College Board, earning a bachelor’s degree or a graduate degree leads to the highest earnings, the lowest unemployment rates, and the widest range of career opportunities. Earning an associate degree or having some level of postsecondary education, such as a certificate of training, also has a considerable payoff.
Start Early
Start planning—and saving—for college as early as possible. Many nonprofits and state-based organizations have programs for students starting as early as kindergarten, to teach students about the importance of education and career planning. Find out more about these programs.
Your high school guidance counselor is also a great resource for college planning, as well as providing scholarship information.
Saving for College
Saving even just a little bit for college can make a big impact. Not sure where to start?
Start with a Plan
Remember, the more you save, the less you will have to borrow. While it may be a sacrifice in the short term, it pays long-term dividends.
- Set a savings goal and calculate how your savings will fit into your regular budget.
- Start early, so your money can have more time to grow.
- Consider setting up an automatic deposit or transfer to your savings. That way, you can be sure to build your savings consistently every month without having to think about it.
- If extra income comes in, or if you get a bonus, tax refund, inheritance, or other influx, consider putting a portion of it toward your college savings.
- Make it a family activity. Work together to build your savings and talk about ways you can save and the benefits of doing so. Consistent small steps will make a difference and build a better understanding of money for everyone.
529 Tax Advantaged Saving Plans
There are primarily two types of 529 Plans: prepaid tuition plans, which allow you to prepay future tuition at today’s rates, and education savings plans. Education savings plans are the most popular and widely available and therefore the focus of this section.
Education Savings Plans
A 529 education savings plan is a tax-advantaged savings and investment plan designed to make it easier to save for college and other postsecondary training, or for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school for a designated beneficiary.
Money saved through the plan can be used for education-related expenses, such as the tuition, books, supplies, technology, and equipment required for enrollment or attendance at any eligible college, university, or trade school.
The main advantage of a 529 plan is that earnings are not subject to federal income tax, and most states also offer tax-free growth and withdrawals. Many states also incentivize savings by providing an initial match or tax deductions or credits for contributions. Contributions to a 529 plan are not tax deductible. Be sure to check with your tax advisor and your state’s plan for detailed information.
Other Resources
Need Help?
EFC members across the country are ready to help you with the college process. Get free, expert help with filing your FAFSA, college planning, understanding your financial aid offer, repaying your student loans, and more! Learn more.
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