From William & Mary on the peninsula to Elizabeth City State University in North Carolina, college campuses are bustling with students.
Just because the school year has started doesn't mean people should not be thinking about a college savings plan. In fact, advocates who work in higher education have been using the past few weeks to talk about how parents and students can better manage their money.
Maria Bruno, a senior financial planning strategist with Vanguard, says you need to think about savings and earnings.
“The sooner you can start saving, the less you need to save over the long term, and that's through the benefit of compounding. So, it's key to start saving early and often,” she says.
Watch related coverage: 4 tips to help you save for college
Saving early and often is great advice, but what does that look like when most people are juggling the cost of tuition with the high cost of day-to-day life?
Many people turn to setting up a 529 account, which is an investment account for education. Participants can withdraw the money tax-free to cover nearly any type of schooling expense.
“I think it's one of the smartest ways to prepare to ensure that you don't have your children go into student debt, or you go into student debt to pay for your children's college,” says Jill Parker Landsman.
Watch related coverage: Looking for extra money to pay for college? Here's your scholarship application guide
Landsman says she set up a Virginia529 account for her two kids when they were still small. They are adults now, but she says it is the reason they graduated debt-free.
“I would simply recommend that anyone who has children they’re going to send to college to keep their eye on rising tuition costs,” Landsman says. “They have been escalating far more than I would ever have guessed.”
During the 2022 to 2023 academic year, the average price of a bachelor's degree was more than $89,000 according to the Education Data Initiative.
Watch related coverage: Building generational wealth despite high inflation
So, what can you do? Whether it is higher education or trade school, first, understand how much it is going to cost in total. Then, see what grant or loan opportunities there are so you get a good idea of your out-of-pocket cost.
Vanguard says to start by putting 3% of your income towards schooling.
A Virginia529 covers K-12 education as well as trade and vocational schools. Other options include opening a Roth IRA account or a Uniform Gifts to Minors Account. A UGMA allows parents or guardians to save for their kid and they get the money when they are old enough.
Just remember, it is never too late to start.
