02.26.13 | Make the Most of College Savings
February 25 – March 2, 2013 is America Saves Week, and to kick things off, student loan giant Sallie Mae released a national study on how Americans save for college. In “How America Saves for College: 2013” the statistics show that although most families are optimistic about their college savings, few are taking advantage of their options today. According to the study “Most college savers remain optimistic about their ability to save and plan to increase their savings in the next five years, though two-thirds don’t have a plan to achieve their goals.”
How Families are Saving
Much of the data has been compiled into an infographic, which shows a variety of ways families save, and the types of accounts they’re using. Of the families saving for college, only 27% choose 529 college savings plans. Other savings vehicles include general savings accounts, checking, investments, and even retirement accounts.
Best Ways to Save
Savings in the student’s name is assessed at a much higher rate than parent savings when applying for financial aid. While a maximum of 5.6% of parent assets count against a family, a whopping 20% of a student’s assets are used in financial aid calculations. When possible, keep funds out of the student’s name, and take advantage of incentivized savings vehicles over checking accounts, for example.