While the overall rate of inflation has been relatively tame over the past couple of decades, the same cannot be said for the cost of college. The price of college tuition has been rising steeply in recent years, pricing many deserving students out of the market and saddling others with crippling debt upon graduation.
Surveys have revealed that the average college student graduates with more than $20,000 in college loan debt, and graduate students can easily rack up debt in the six-figure range. Even upper-middle class parents worry that they will not be able to afford a college education for their children. They fear that their sons and daughters will have to take on tens of thousands of dollars in college loans and spend their first few decades in the workforce paying off their loans instead of buying a home and starting a family.
The good news is there are ways for parents and grandparents to fight back against the rising cost of a quality education. The perfect time to start saving for college is as soon as the baby is born. College costs are not expected to go anywhere but up, and the sooner you get started on your savings plan the better off you and your offspring will be.
One of the great things about saving for college is that there are so many choices available. Whether you are saving for the education of your own children or helping out with a cherished grandchild, you can choose a variety of saving and investment platforms designed to tame the cost of college and reduce the number of college loans that will be needed when the time comes.
If you have a long time horizon, you might consider a 529 plan to pay for the future cost of college. These plans are designed to be easy to set up, simple to fund and convenient to use. Parents and grandparents can both add to the account, and over time the balance can grow substantially.
Parents and grandparents also have the option of creating special savings accounts for their children and grandchildren. Whether your son or daughter is already in high school or just getting started in kindergarten, these special FDIC-insured savings accounts are designed with safety in mind. A college savings account can keep your funds safe while providing the long-term growth that will help the special young person in your life offset the high cost of college.
If you prefer you can open a fully FDIC-insured college CD for your children or grandchildren. These certificates of deposit also provide rock-solid safety, but they often pay a higher rate of interest than a simple savings account. If you are looking for a way to deal with the cost of college and get your children and grandchildren off to a great start, one of these insured CDs might be just what you have been looking for.