Any Amount You Can Save for College is a Win

As the Communications Associate here at MEFA, I'm one of the main folks answering your phone calls and reading your emails in our collegeplanning@mefa.org inbox. I talk to a lot of families about all aspects of college planning, saving, and paying. Whether they are a family with young children, or one with a senior in high school making their college list, at one point or another we end up talking about their college savings.

Sometimes the conversation is about how the family regrets not saving at all, and that does change the dialogue a bit when it comes to affordability of college. However, most times the conversation is more about how they feel like they didn't save enough. To be frank, often it can feel like any amount you've saved isn't enough. With rising tuition costs, the amount in your account can feel like a drop in the bucket. It is understandable to feel that way. Though it really isn't the case.

When talking to college savings experts, they don't say that there is an exact dollar amount that you should save. The guidance is always that everyone should save when they can, as often as they can, until it is time to send the child off to school. All of life's tasks can get in the way, and there are some months or years a family may miss. No matter, the amount that is in a college savings account is the amount that the student won't have to incur in college debt.

Some families think that the amount they saved is going to affect the amount they can receive in  financial aid, so they are afraid to continually save. The truth of the matter is that while college savings plans are considered in the calculation of financial aid, the impact is minimal. The financial aid calculation assumes that, at most, only 5.6% of parent assets (including any college savings accounts for the student) should go to pay for college. The rest is ignored. And even greater news is that you have funds stashed away to help pay for college. You will have the money that is owed on the college bill, because you saved!

Saving for college is an important step in the college planning process and there isn't a right or wrong way to do it. If you, as a family, have a plan and stick to it (no matter the amount) then you're all on the right track. We here at MEFA offer two great options for saving for college: the UPlan and the UFund. The UPlan, the Prepaid Tuition Program, lets you lock in a percentage of today's tuition costs and mandatory fees at a network of colleges and universities in Massachusetts. The UFund is a 529 college savings account managed by Fidelity. The money is invested in the market and can be used for most colleges in the United States and even some international schools as well. You can invest in one of them or both, there isn't a wrong choice.

For more information on saving for college, you can visit mefa.org/college-savings-plans. And if you have questions, reach out to us at collegeplanning@mefa.org or (800) 449-MEFA (6332). My colleagues and I are happy to help.

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