It's not too late to save for college

Your Money

March 18, 2007|By McClatchy-Tribune

A 14-year-old today will need $138,000 to attend a private four-year university, according to the calculator at SavingForCollege.com. That's a daunting figure for parents who haven't stashed anything in a college fund. So is it too late to start saving?

No, says Rande Spiegelman, vice president of financial planning for the Schwab Center for Investment Research. Even if you just have a few years, every little bit you save now will help. And don't forget that the costs won't come at you all at once - they will be spread out over four years.

If you're worried that your savings are going to reduce the amount of financial aid your student will receive, don't be. Current financial-aid formulas assume that only about 5 percent of parental assets will be available to pay for college.

Start by opening a 529 college savings plan, which allows you to save tax-deferred. Earnings that are spent on qualifying educational expenses are tax-free. But if time is a factor, be sure to go for conservative investments, like short- to intermediate-term bonds or money-market funds.

Consider joining an affinity program that offers college savings rewards, such as Upromise or BabyMint. Register your credit card with the affinity program and reap tuition benefits such as 529 plan credits when you shop at participating stores.

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