The cost of college is one of the biggest challenges American families face. It is no wonder a new report from Fidelity Investments finds nearly half of recent grads saying they are stressed out about the student loan debt they have accumulated. Here to talk about college savings and planning strategies is Fidelity Investments Vice President of Retirement and College Products, Melissa Ridolfi.
Melissa starts by saying that the good news is, the overwhelming majority of college students feel that they made the right decision in the college they attended. Three out of four students said they factored in cost when making that decision. However, we cannot ignore the news and seeing that student debt has reach 1.3 trillion dollars. It makes sense that nearly 50% of current college students and recent graduates feel significant stress about the debt they’ve accumulated.
So, what can be done to ease the college debt burden for college bound students? Melissa explains that it is very important to have a talk as a family about the costs of college. Parents need to talk with their children about the total cost of college and how they are going to pay for it. This can help to start planning early. By saving early, you not only have the opportunity to save more over time, this gives your money more time to grow. Fidelity has seen this in action as more people are starting to save early, even when their kids areas young as two-years-old.
So, what are the benefits of a tax advantaged 529 college savings plan? The 529 saving plan is a flexible account specifically for educational expenses. Your earnings will grow tax deferred and any withdrawals that are used for qualified educational expenses will be free from federal income taxes, and in some cases state taxes as well. Many states offer additional tax benefits if you invest in your home state’s tax plan. The bottom line is that you are given the opportunity to have more saved for college.
The top pieces of advice for a high school student getting ready to attend college are start to save early, and be sure to research grants, scholarships, financial aid, and the implications of taking on too many student loans.
For more information, visit fidelity.com/college.