It's no secret that college costs are rising. Students and families preparing to undertake the financial responsibility that comes with a college education must be resourceful. Funds for college usually come from a variety of sources, including college savings accounts, part-time jobs, financial aid, scholarships and student loans.
Student loan borrowers rely on future income to pay off their loans. Paying off this debt usually takes many years, and can amount to a substantial expense over the life of the loans. To help minimize the burden of student debt, it is wise to plan ahead for college savings and to borrow only what you need. Some ways to plan ahead include:
Investing in a 529 plan. Every state offers at least one 529 plan, which is an education savings plan operated by a state or educational institution to help families prepare for future college costs. There are two basic types of 529 plans:
- Savings plans base account earnings on the market performance of the underlying investments, such as mutual funds.
- Prepaid plans let you pre-pay all or part of the costs of an in-state public college education—commonly marketed as "paying today's tuition rates for tomorrow's education." These plans may offer significant tax breaks, so consult your tax professional before making a commitment.
Getting a solid return on your savings. If you only have a few years left until college and you haven't yet begun a long-term savings plan, certificates of deposit (CDs) or money market accounts may be good savings options that may earn higher rates of interest than traditional savings.
Ally Bank offers some of the most competitive rates in the country and we compound interest daily to help maximize your return. Your funds at Ally Bank are FDIC-insured to the maximum allowable by law. There's no minimum balance to open your account, and no monthly maintenance fees. Learn how Ally Bank can help you prepare for college by visiting Allybank.com or call live, 24/7 customer care at 877-247-ALLY (2559) today.
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