Since starting CheapScholar.org, I have received a lot of questions from families and students that are trying to navigate the financial aspect of their college experience.  I individually respond to each and every question and sometimes I even include the question and answer in our Help A Reader series.  This interaction with my readers is very rewarding for me and I enjoy every moment of it.

In an effort to better support my mission of helping families and students, I have established the CheapScholar.org College Resource Center.  This tool provides great information and tips associated with Financial Aid/Scholarships, Paying for College, Saving for College, and choosing the right Education loans. In addition, I have created a new utility that allows you to type your questions into a search box and it expeditiously goes out and locates the best matching articles/answers on CheapScholar.org. Pretty neat huh?

If you would like to give the CheapScholar.org College Resource Center a spin, just click on the picture below.  Also, if you don’t mind, please feel free to share this great information with any friends or family members that you think may be able to benefit from this type of resource. Enjoy!

As we continue our year end round-up series, I thought it would be a great idea to share with you some of my favorite articles from the last year related to Saving For College. Hope you find these posts informative! If you know of anyone else that can benefit from this information, please feel free to utilize the “share tab” below to pass it on.

SAVING FOR COLLEGE

• The Best Online College Savings Planner
• Everything You Ever Needed To Know About 529 Plans
• National College Savings Month
• Should You Use Retirement Savings?
• Saving For College In Kindergarten
  

Establishing a college savings plan for your children could possibly be one of the most important things you can do to insure their future success in going to college. The two most popular questions I get from families is “How much should I save?” and “When should I start?”. The answers for these questions can get pretty complicated depending on each family’s particular situation (income, assets, number and age of kids, etc…). However, my quick and easy response is to save often and save early.

You should contribute to a college savings plan as consistently as feasible and as much as you are financially able. A good number of families start by just having a portion of each paycheck automatically deposited into a separate savings account. Then at the end of each year they withdraw the accumulated funds and deposit them into a 529 college savings plan. It is a fairly simple approach but it gets the job done and over the years you will be surprised out how your investment will grow.

Online College Savings Planner

The following tool provided by Archimedes Systems is probably one of the best college savings calculators I have come across. It allows you to input a number of variables to help you come up with the recommended amount that you should plan on saving for college. It even has the ability to factor in up to five children of varying age. Once you are complete with filling out the form and feel you can’t tweak it anymore, you can view and print out a final college savings plan report to hang up on your fridge. If you would like to get started with your own personal approach to college savings, just click on the picture below and you will be swept away to financial bliss as you feel resolved in knowing that you have a plan in place to start your college savings.

The following is a guest post from Ocean Gildee who is a contributing writer for ReadyU & The Real College Guide.

Being a college student used to mean eating three packs of ramen noodles a day and biking around campus because gassing up your 1985 Chevy was too expensive. Whether you work a part-time job or get an allowance from your parents, you can learn some key concepts to saving and spending wisely — now and after college.

Smart Spending
There are plenty of ways to save a few bucks every day. Dr. Dick Verrone, personal-finance professor for the Cameron School of Business at the University of North Carolina, Wilmington, has these penny-pinching tips:

• Order water. Don’t get soft drinks when you’re eating out. Why pay $2 for 150 soda calories? Also, Verrone says, “Never order orange juice.” OJ is extremely overpriced at restaurants, and most of the time it’s from concentrate.
  
• Limit your pocket cash. When going out on the town, take a 20-spot, and leave your cards at home. You’ll be forced to keep your tab under $20.
• Buy quality clothing items. They may be a little more expensive, but they’ll last longer. Verrone also definitely approves of outlet shopping. But before making purchases, think: Do I need this? If not, don’t buy it!
• Switch your prescriptions. Change your name-brand medications to generic ones. You can usually save about $20 per med this way.

Clipping “Coups”
OK, most college students don’t have easy access to a daily paper or coupon flyer, so how do you save with coupons and special discounts?

• Look online. If you’re going to the sporting-goods store, for example, type the name of the store into the search engine, along with the words coupon codes. Lots of websites track down discount codes for online shopping, as well as printable coupons for buying items in-store.
• Sign up for discount alerts via text. Some campuses have local text-message discount services — check at your student center or information desk. (Of course, this is not a good idea if you don’t have an unlimited cell-phone plan.) Mike Meyer, a UNCW senior, is signed up for deals in North Carolina at CouponstoYourPhone.com. “Every Monday, I get a coupon-text for one of my favorite restaurants,” he says. “It’s awesome.”
• Purchase a coupon book. These books pack hundreds of coupons, usually for buy-one-get-one-free offers. They’re worth the $25 (if you buy one from a campus organization’s fund-raiser) or even $35 (available online at Entertainment.com) after just a few uses.

Long-term Saving
Verrone recommends getting into the habit of saving now to set yourself up for an easier financial situation after graduation. “Make the amount small enough so you can do it,” he says, such as saving $5 per week or $10 each month.

• Set up an automatic transfer. Most large banking institutions, such as Bank of America or Wachovia, will let you set up transfers between linked checking and savings accounts. Meyer has $30 a month transferred. “That’s how I saved money for spring break freshman year,” he says.
• Start an individual retirement account. No, you’re not too young! This is the time to do it. “Once you’ve accumulated $200 to $300, open a Roth IRA and continue to fund it every month from your savings,” advises Verrone. Even if you continue to only save that $10 per month, you’ll be accumulating real money for the future.
• Watch your money grow. Let your savings work for you by investing in mutual funds with low expenses and superior performance records, suggests Verrone. Consult a financial adviser at your bank for more information.
• Consider an online banking service. Having an online bank can be a good outlet for putting away large sums of money that you can still access without penalties (unlike with an IRA). Online banks usually provide higher interest rates, although transfers take two to three business days. Meyer has a savings account with INGDirect and loves it: “A two-day transfer is more of a commitment, so I have to really think about it before I make that decision.”

Don’t you wish everything in life could be solved in three steps or less?  It sure would make things a heck of a lot easier. While paying for college probably deserves more attention than three steps can provide, I am going to attempt to give you the quickest solution known to mankind for covering your tuition expenses.. and yes.. it will not surpass three steps.

The Made Up Situation

You just got your tuition bill in the mail for the first semester of classes and it says that you owe the University $10,000. Most people would gasp at this dollar amount but you chose to go to Princeton and $10,000 a semester is a pretty good deal after you factor in all your financial aid. Since this is your first semester and you plan on going to classes next semester, you can probably count on another $10,000 bill before the end of the year. So your total college expense billed through the University for the year will be $20,000. Now that we know what figure we are working with, let’s go ahead and see what your options are when it comes to paying this bill (besides check or cash).

The Three Step Approach To Paying Your Tuition Bill

1. The Pay In Full Each Semester Bill Approach: This type of billing has been adopted by universities far and near and basically it allows the family to pay for each semester (in full) as the billing is generated. The majority of families pay for education in this manner and they usually utilize two sources to make these payments – savings or discretionary income. Based upon your “Made Up Situation” above, you can send in the check for $10,000 and feel resolved that you have done your part (financially) for the semester and eagerly await the mailing of your next billing statement. If step one doesn’t solve your tuition woes, then you should certainly move onto option two and see if it helps to provide light at the end of the tunnel (and no the light is not a train!)
2. Monthly Payment Plan Approach: Most colleges and universities have some sort of monthly payment plan that they can provide for their families. Some are managed in-house and others utilize a third party to process the payments. Regardless of how they provide this option, it is definitely something for you to consider. My experience with monthly payment plans show that they don’t charge interest but they do usually have a nominal enrollment fee. Most payment plans can span over the entire academic year which typically is about ten months. Based upon the arbitrary payment amount above ($10,000 a semester), you would want to budget $20,000 on your monthly payment plan, or $2000 a month for a ten month plan. Still not providing a cure to your tuition bill blues? Let’s move onto step three!
3. Education Loans Make Ends Meet Approach: Not my favorite option by a long shot. However, if you are unable to take care of your tuition bill using options 1 and/or 2, then it is time to look at additional education loans. My advice would be that you exhaust federal loan programs 1st and then as a last resort start looking at private options… including your local credit unions

Ok.. that is it.. the three step approach to paying your tuition bill. But wait! I have one more option if you are eager and/or interested.

The A La Carte Approach To Paying Your Tuition Bill

You are used to A La Carte in the lunch line when you get to pick and choose form the menu what you are going to eat for the day. Why not apply the same principle to paying for tuition? What if you are able to choose and mix and match from the three options above to find a way to cover your tuition bill? Sound like a good idea? Surprisingly, most schools will be “ok” with this approach.. as long as you do it right. Let’s take the $20,000 figure and come up with a quick scenario of how this can work.

1. Option 1 (Pay In Full): I can’t afford to pay $10,000 each semester but my checkbook says that I can do about $2,500 a semester. Based upon that figure, that leaves me with $15,000 that I need to figure out how I am going to pay. Immediately, I look at option 2.
2. Option 2 (Monthly Payment Plan): $15,000 over ten months would be $1,500 a month. My budget dictates that I can do about $1,000 a month. $1,000 a month for ten months would be $10,000. My balance was $20,000 for the year and I am paying $5,0000 with option 1 and $10,000 with option 2. That leaves me with $5,000 unaccounted for and that is when I refer to option 3
3. Option 3 (loans): Since I am trying to pay as much as I can now (using options 1 & 2) and not maximizing my full loan eligibility, I only need to get a loan for $5000 to finish out the remainder of the tuition I will owe for the year.  Whew.. Glad that is over! Now onto more import things – like studying and going to class!

As you can imagine, I came up with that tuition payment scenario and situation very quickly. What you will want to do is sit down as a family and have that kitchen table conversation utilizing your numbers and figures and come up with the option(s) that works best for you. When you take the time and effort to make these decisions as a family it will benefit all involved (mom, dad, and student!).

Hope you found this article helpful. If you know of anyone else that can benefit from this information, please be sure to pass this along using the “share tab” below. Also, if you have any questions related to paying or saving for college or the financial aid process, don’t hesitate to contact CheapScholar. I always enjoy hearing from our readers.

Tuesday of this week, Fidelity Investments said that it is going to celebrate National College Savings Month by providing something different, something new to all of their clients that are looking for conservative college savings options. Actually, they made no mention of National College Savings Month, but I give them credit for coming up with a new college savings idea that coincides with this month!

As someone that talks with families on a regular basis, I have heard time and time again about how poorly their 529 college savings plans have been performing in the past couple of years. Since most of these funds are invested in stocks and bonds, they are subject to the same volatility that is experienced by the rest of us that have dabbled in the stock market over the years. Some days and months are good and others… not so much.

Since families have been experiencing more of the “not so much”, they are trying to find options that provide guaranteed returns and some sort of protection from the financial ups and downs of the investment market.  Fidelity Investments has heard the call of these families and is happy to oblige.

They are rolling out a 529 savings plan that is an interest bearing bank deposit savings account with FDIC protection. You basically get the best of both worlds. You get the tax advantages of having a 529 college savings plan AND you get the safety net of having your funds be FDIC insured.

The interest rate of return is indexed to the federal funds rate (which is hovering around zero) but one can only hope that is has no where to go but up… if they are investing in Fidelity’s new 529 option.

If you would like to learn more about the college savings options provided by Fidelity, you can check out their website here for more information.

Today marks the last day of National College Savings Month, but I certainly hope you know that you don’t have to wait for September of each year to start a college savings fund. If you are busy today and have to open a college savings account tomorrow, trust me… no one will harass you because it is October and not September!

I can’t stress enough the importance of saving for college. If you have little ones that are making their way through the traditional K-12 education ranks, it is a good idea to start a college savings account right away. Some experts state that the best time to start a college savings account is even before your children are born. However, the realist in me recommends shortly following their birth or kindergarten to start that education savings.

You can start out with a simple savings account at any bank with money provided from Christmas and Birthday cards and later make the decision to formalize the college savings by rolling it onto a 529 savings plan or something similar. The key thing is to start sooner versus later because if you think the cost of education is high now… just wait until your future high school junior/senior starts looking at their college options years from now.

In addition, having a college savings plan in place for your children will definitely be more encouraging as they consider whether a college education is the right path for them.  If having a quality education isn’t convincing enough, the College Board states that the median family income in 2008 for those with a bachelor’s degree or more was $101,099, compared to $49,414 for those with just a high school diploma. The numbers speak for themselves.

If you are curious about the different vehicles in which you can save for college, don’t hesitate to check out our guide to college savings provided by CheapScholar.org Contributor Phil Laube, a CPA from Ohio. He provides comprehensive descriptions of the different options you can choose from to save for college and he also shares some great links to other sites for additional information.

Some Interesting Info About College Savings Month

Originally started by the College Savings Plan Network, more than 40 states have declared September “College Savings Month.” Section 529 plans make it easy and affordable for the average family to plan ahead for the cost of college attendance and are available in 49 states and the District of Columbia. In fact, the 108th Congress of the United States officially recognized September as College Savings Month in 2003. Across the nation, many activities are held and communications sent out to recognize the importance of saving for college during the month. CheapScholar.org included!