Strategies for Saving for College

By Deborah Nayrocker

Dear Deborah: We would like to send our child to college. What are some financial strategies and considerations to keep in mind as we plan ahead?

Answer: The sooner you plan ahead for your children’s college education, the more advantages you will have.

What Parents Can Do:

  1. Minimize debt. This improves cash flow now for savings as well as during the college years.
  2. Become familiar with the Free Application for Federal Student Aid (FAFSA). Parents can submit the FAFSA online at after January 1 of the student’s senior year in high school. This is the first step to obtain the Expected Family Contribution (EFC). Schools’ financial aid departments use the EFC dollar figure for financial aid packages. Cost of Attendance (COA) minus Expected Family Contribution (EFC) = Need.
  3. Ask the college bursar about tuition installment plans. Many colleges offer payment plans that divide annual college payments over 9-12 months. There is usually an annual fee of $50-$100.
  4. Start saving for college expenses.

Mark Kantrowitz, publisher of, says the 529 college savings plan is one of the best ways to save for college. He states: “These are tax-advantaged ways of saving for college, similar in concept to a Roth IRA and other retirement plans. Generally, you should invest in the state 529 college savings plan with the lowest fees, such as one run by Fidelity, Vanguard, or TIAA-CREF. Use the direct-sold version, not the adviser-sold version, as the direct-sold versions have lower fees.”

“All 529 college savings plans have conservative investment options, such as money market accounts and US Treasuries. Some even include certificates of deposit as investment options.”

What High School Students Can Do:

  1. To become eligible for scholarships and grants, high school students should aim to do their best in school. As they work for a high grade point average, they can also complete advanced placement program (AP) classes. Sponsored through the College Board, academic college credit is given to students who do well in high school AP classes.
  2. Strong SAT and ACT national test scores not only help students attend their college of choice, they help students qualify for more grants and scholarships at that institution.
  3. Whenever possible save for education. Set aside funds from monetary gifts and part-time employment. Scholarship committees and universities like to see that students expect to contribute.
  4. Be flexible in a choice of a college or university. Financial aid, in the form of merit-based aid and need-based aid, varies from school to school. The second choice school may offer a better deal.

Having a quality college education increases the likelihood of better pay and career placement. According to Seattle Times Company, the U.S. unemployment rate for four-year college graduates is 4.8 percent, 5 percent lower than for high school graduates, who have 9.8 percent unemployment (1/18/11).


Deborah Nayrocker is an author and columnist. She is the award-winning author of The Art of Debt-Free Living and Living a Balanced Financial Life.

Copyright by Deborah J. Nayrocker. All rights reserved.



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