By Russ H., Senior Stockbroker and Guest Blogger
For many, the spring of 1997 was just like any other. Flowers bloomed, birds chirped, grass and gardens grew, like the year before, and the year before that, and the—well, you get the picture.
I, however, was eagerly anticipating my college acceptance letters, specifically one from the University of Northern Texas. I was already admitted to many state programs in my home state of Colorado, but I was dying to get into the Texas school because of its amazing jazz/saxophone program.
Finally, the letter came. With nervous anticipation, I tore open the envelope, pulled out the paperwork, skimmed through the first paragraph, and then stopped. I was accepted.
Excited, I ran straight into the house to tell my dad.
“Dad, I got in to the University of Northern Texas!”
His response: “It’s 10 times more expensive, and there are plenty of good schools here.”
The next weekend I toured three Colorado schools, wishing I’d saved more and prepared for a school that was “10 times more expensive.”
Today, parents and soon-to-be college students are faced with even greater costs. Many recently flocked to Twitter after news broke about rates doubling for subsidized Stafford loans, to tell Congress #DontDoubleMyRate.
Congress decided last week to freeze interest rates on subsidized Stafford loans at 3.4 percent for one year to help keep college affordable. It’s good news, but only a short-term solution. So what does Scottrade have available to help you save for a college education?
How much you will need?
In order to get from point A to point B you will need to know not only how to get there, but what it will take to get there. I always direct clients to our online Knowledge Center. There, you’ll find pertinent investing information, including our College Savings Calculator, which provides you with an analysis of projected tuition costs vs. projected savings based on your current savings, annual contributions, tax rate, expected rate of return, and the number of students in your household.
No-fee Coverdell Education Savings Account (ESA)
Having a solid plan in place to save for college and sticking to it is more important than ever. An ESA is possibly a great place to start. Using Money Direct, you can set automatic deposits to be transferred straight from your checking or savings account to an ESA every week, month or quarter. Allowing for up to $2000 in contributions per year, funds in an ESA grow tax deferred assuming withdrawals are used to cover education expenses (elementary, secondary, or college). Much like other Scottrade accounts, you have a number of investment vehicles at your disposal; stocks, bonds, mutual funds, exchange-traded funds (including our 15 commission-free Focus™ Morningstar ETFs ), and certificates of deposit (CDs).
Oh, and in case you’re wondering, the Texas school was only four times more expensive. My father can be quite prone to exaggeration at times.
What are you doing to maximize saving for college?
Russ H. has been with Scottrade since 2008, and is a senior stockbroker in Fort Collins, Colo.
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