How to Save for College: Simple Tips for Long-Term Planning

The cost of college continues to increase, but so does the availability of tools and strategies to help families plan ahead. Whether your child is starting kindergarten or preparing for college tours, now is the perfect time to revisit your savings strategy.

September is College Savings Month, and American Heritage Credit Union is here to help families explore options that make higher education more affordable and less stressful.

What College Costs Should You Account For?

While college comes with standard costs like tuition and supplies, there are some costs that are unique to college that you won’t want to forget. These include:

• Room and Board, whether in a dorm, apartment, or some other form of off-campus housing
• Dining, including meal plans and groceries
• Furniture and room décor
• Textbooks, digital access codes, e-books, and other study materials
• Electronic devices, like a laptop or tablet
• Travel to and from campus
• Laundry
• Clubs, honor societies, or Greek organizations (fraternities and sororities)

And don’t forget to account for the repair and maintenance costs your child may encounter when away at college! This goes for their electronic devices, as well as their car if they’ll have one on campus.

1. Start with a Plan That Fits Your Family

Every family’s goals, income, and timeline look a little different, and that’s okay. What matters most is creating a plan that’s flexible, realistic, and built to grow with your child.

When it comes to college, consider:

• When your child may start college
• Whether they plan to attend a public or private school
• Your available income or ability to set aside savings regularly
• How family members may contribute over time
• Encouraging their interests and talents. Whether it's music, a sport, or community involvement, there's bound to be a scholarship or grant out there for them to apply for.

You can use American Heritage’s Online Teller or direct deposit features to automate contributions and stay on track, even when life gets busy.

2. Open a Tax-Advantaged College Savings Account

American Heritage offers two great ways to grow your education savings tax-free:

Coverdell Education Savings Account (ESA)

• Ability to save up to $2,000 per year, per child under the age of 18
• Tax-free growth and tax-free withdrawals for qualified education expenses
• Ideal for covering books, supplies, tuition, and more 

529 College Savings Plan

• Funds can be used at most U.S. colleges, and even some abroad
• Flexible contributions with generous tax advantages
• Can be opened by parents, grandparents, or any loved one

Both options can help maximize every dollar you save and bring peace of mind when it’s time to pay tuition bills.

3. Involve the Whole Family

Grandparents and other relatives often want to help, so let them! Here's how they can make a meaningful impact:

• Contribute directly to your child's ESA or 529
• Gift cash or savings bonds for birthdays or holidays
• Match your child's summer job savings as a fun incentive

And the help doesn't need to stop with aunts, uncles, or grandparents! Teens who contribute their own money to these savings accounts build financial literacy and ownership over their future.

4. Search for Scholarships and Grants

You’ll be able to stretch your savings even further through scholarships and grants. Whether your child is involved in the community, participates in extracurricular activities, or has special interests, there are scholarships out there for every student.

• Work with the guidance counseling department of your child's school to look for relevant scholarships and grants
• Explore offerings beyond academics, as your local community may offer these kinds of funds

When it comes to scholarships and grants, have your child apply to as many as they can! It never hurts, and you may be surprised at the volume of what’s out there.

5. Explore Student Loan Options

When savings and scholarships aren’t enough, private loans can help bridge the gap. American Heritage partners with Sallie Mae® to offer:

• No origination fees or prepayment penalties
• Flexible repayment options while in school
• Competitive fixed and variable interest rates
• Potential interest rate reductions for qualified borrowers

Applying with a creditworthy cosigner may improve students' approval chances and interest rate.

6. Make Savings a Habit

You don't need to contribute a big lump sum to make a different in your college savings goal. Try:

• Contributing a little from each paycheck
• Setting savings goals by year or grade level
• Reviewing your plan annually to adjust for rising costs

Even small steps, when taken consistently, can turn into big wins over time.