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5 strategic ways to save for your child’s college tuition

529 plans is the most popular savings tool for college, but other options may suit you and your child better. (iStock)

With rising college tuition costs – ranging from $ 9,410 for public universities to $ 32,410 per year for private colleges – saving for your child’s schooling is a challenging task.

But as intimidating as it may seem, you can successfully create a savings plan for your child’s college education by carefully considering your options such as investment planning, tax deductions, and other financial planning tools. In other words, it is important not only to know how you will save money, but also where you will place the money.

Consider these five strategic places to save money on your child’s college education and avoid later debt from student loans:

  1. High yield saving options
  2. 529 plans
  3. Roth IRA
  4. Broker accounts
  5. Coverdell Education Savings Accounts (ESA)

If you want to start saving for your child’s savings plans in college, visit the Credible online marketplace to compare rates for a high-yield savings account.


1. High Yield Savings Account

A High yield savings account is an ideal place to store short-term savings and emergency funds. If your student is approaching the enrollment deadline, it is important that you keep the money in safe investment accounts.

“High-yield savings accounts offer security and predictability,” said AdvicePeriod Partner Advisor Ray Prospero. “They are the safest option for savings in college, because they also offer FDIC protection.”

If you use them as savings plans in college, you’ll still have money, even if the bank goes belly up for bread.

In addition to your education savings account, you can save extra money with a a high-yield savings account, which earning rates which are much better than the national average of 0.04% APY, according to the FDIC. Compare multiple high-yield savings options with a network market like Credible.

2. 529 plans

Other investment options include Plan 529, which is an account that allows you to save for a college with a potentially better return than if you put money in savings account.

“529 plans offer several tax breaks for college savings,” Romero said. “The money grows by tax deferral, and if it is used for qualified higher education costs, withdrawals are also tax-free.”

Since the enactment of the 2019 Security Act, eligible education costs now include more than mere faculty costs, such as:

  • Private basic
  • High schools
  • Religious schools
  • Home education
  • Apprenticeship
  • Repayment of a student loan

Some 529 plans include the option of paying a prepaid tuition fee that allows you to avoid future tuition fees by paying today’s tuition fees in advance. According to FinAid.org, tuition is rising about 8% per year, which means that the cost of schooling doubles every nine years. You can achieve a lot of savings through a 529 subscription plan if you can fund at least part of your child’s tuition while they are young.

But despite the tax benefits, the biggest disadvantage of the 529 plans is the lack of flexibility – you have to use the funds for qualified education costs to take advantage of these benefits.


3. Roth individual pension accounts (IRA)

Like the 529 plans, Roth IRAs offer delayed tax growth and non-taxable withdrawals. However, Roth IRAs can provide more flexibility because you are not limited to using money exclusively for educational institutions. Once you start saving your child’s college fund in the Roth IRA and end up with the surplus, you can keep the excess money in your retirement account and withdraw it without penalty after you exceed the age threshold.

“Although withdrawals are made before the age of 59, and half are usually punishable by a 10% early withdrawal, any withdrawal due to higher education costs may be exempt, provided it is made on behalf of the account holder, their children or grandchildren.” is Prospero.

4. Broker account

Although traditional brokerage accounts are taxable, they are still excellent investment opportunities for those saving for tuition, providing access to most of the investments you would like to buy or sell. Your investment planning can involve investing your money in many things such as stocks, mutual funds, bonds, currencies and futures.

“By investing in securities, the potential for account growth is greater,” Prospero said. “However, such is the risk of loss.” It is necessary that the account is invested in accordance with the risk tolerance, time horizon and goals of the account holder. “

If you don’t want to risk a loss, a high-yield savings account is a safer option. Find it a high-yield savings option that best suits your needs in Credible.



529 plans is a popular way to save for your child’s tuition, but it’s not the only game in town. Other types of investment accounts allow for tax deductions for many eligible higher education costs, offer higher returns, or are more flexible than 529 plans.

Each of the above property locations offers unique benefits and tax considerations. As you work through your tuition planning, keep in mind your goals and risk tolerance.

For example, a brokerage account may offer the potential for higher profits but also greater risk exposure. On the other hand, you can find a high-yield savings account on Credible which provides a secure place to store your money, with higher APYs than a traditional savings account.

Have a question about finances but don’t know who to ask? Email a credible money expert at moneyexpert@credible.com and your question can be answered by Credible in our Money Expert column