June 30, 2022When Should I Start Saving for College?
According to the Pew Research Center, 34% of adults ages 18 to 29 say they have outstanding student loans from their education expenses. About six out of ten college seniors ages 18 to 24 took out loans for their education in the 2015-2016 school year, according to the National Center for Education Statistics.
The sooner you begin putting money away for your child’s college education, the better. As college tuition and fees continue to climb, getting ahead of the curve sets your child up for success and reduces the student debt they might accumulate in the future. The less burden you can put on your college-aged student, the better chance they have of paying off any educational debt and successfully entering the workforce.
A Coverdell Education Savings Account (ESA) is a trust or custodial account designed to help families pay for education. Similar to a 529 savings plan, a Coverdell ESA offers tax-free earnings growth and tax-free withdrawals when the funds are spent on qualified expenses. It also has a higher rate of return than you’d get from a regular savings account and is federally insured by the NCUA.
With a Coverdell account, you can contribute as much as $2,000 a year to further both college and private K-12 education. With this rate of contribution, you would have invested $36,000 by the time your child turns 18. (Note: The rate of growth with an ESA varies based on the investments in the account.)
In addition to college savings accounts, PEFCU offers a large variety of savings options to help you get ahead of the game. If you are saving for the holidays, investing for your retirement, or just being thrifty, we can help! For more information about our investment and savings options, please visit our website at www.PEFCU.com or visit your local branch.
For additional information visit: Coverdell ESAs