What if I told you that you could earn hundreds of dollars a year for your little one’s 529 college savings plan by doing nothing? (Okay, not nothing but just by signing up for Upromise.)
You might say “Why should I worry about college now, my kid is still in diapers?!”
You might say “What the heck is a 529 college savings plan?”
You might say “Upromise? Is that some kinda scam?”
All of which are excellent questions. So let’s start from the top, shall we?
Why now (or ever… who cares about college)?
The days where you could get an entry level job and work your way up the corporate ladder with nothing but a high school diploma are all but gone. For better or worse, many of today’s employers see a bachelor’s degree as a requirement, even for entry level positions.
Maybe your child won’t need a college degree. Maybe he or she will strike it rich at athletics or technology. Steve Jobs anyone? However, are you willing to take that gamble for your child?
That brings me to the “why now?” question. In the 2015-2016 academic year, in-state public college tuition averaged $24,061 and private college tuition averaged $47,831 (collegedata.com). Using this figure as an estimate, tuition for a bachelor’s degree earned over 4 years would run $143,784.Yikes!
And those numbers are for now… what will the price be when your little one is ready for college?
So that’s why you should start saving now. Like right now!
Tip: You can use college planning calculators to help you figure out just how much you’ll need to sock away.
What’s a 529 college savings plan?
529 plans allow you to save money for your child’s college education. Simple enough right? Well, to make things slightly more complicated, there are two different 529 plans you should be aware of.
Prepaid 529 Plans
With this type of plan, you select the college or university your child will attend in the future and lock in a tuition rate now. The biggest risk with this plan is that you are really limiting your child’s college options.
This type of 529 plan is state-sponsored so the details and quality of the plan will vary widely from state to state. For example, some states lock you in at what the tuition rate is right now while others forecast for a higher tuition in the future. If you’re going to opt for a prepaid 529 plan be sure to do your homework! Thorough research is required to make sure you get the best bang for your buck.
To help you get started, be sure to check out this state-by-state comparison tool.
529 Savings Plans
With this type of plan, you invest money in a tax-deferred account and that money is later used to cover college tuition. You can use this money for any college or university (unlike the prepaid plans). Something I really like about the 529 savings plan is that as long as your child uses the money towards educational expenses such as tuition and room and board, he or she won’t have to pay federal taxes on the money.
Furthermore, if your child opts not to go to college, you don’t forfeit your money. You can make another child the beneficiary or simply withdraw the money and use it for whatever you’d like (although you would have to pay taxes and a federal penalty in that case).
Learn more about 529 plans in the article What Every Parent Needs to Know About Saving for Their Child’s College Education.
How can Upromise help?
Once you’ve established a 529 plan, it’s important that you contribute to it on a regular basis. Basically, you’ll want to contribute as much as your lifestyle and budget will permit. That’s where Upromise will come in handy.
Upromise offers ways to earn up to 10% cash back for college, numerous financial benefits, and tools to help you meet your college savings goals. And it’s free to join!
One way to earn cash back through Upromise is to simply use their website to shop, book travel, and make other routine purchases. By doing this, you’ll be eligible for up to 5% cash back at some of your favorite merchants.
You can boost that cash back by signing up for the no annual fee Upromise MasterCard. When you pay for purchases on the Upromise website with your Upromise MasterCard you’ll earn an additional 5% back. See how that money is really starting to add up?
The Upromise MasterCard offers other benefits as well including no limit on the total cash back you can earn, complimentary FICO credit scores, and $0 fraud liability on unauthorized transactions. Seriously, this one is a no-brainer, right?
You’ll also want to check out the Upromise GoalSaver savings account. This account is free to create, has no monthly fees associated with it, and does not have a minimum balance.
“ Upromise GoalSaver is a savings account that makes saving for school and related expenses simple. Simple because it helps you set, visualize, and track your progress. And it’s easy to set up multiple goals (such as multiple kids you are sending to college) for whatever you are saving towards.”
You may be thinking this is too good to be true but you’re wrong. Not only is Upromise the real deal it’s real simple as well. You just go to the website, create an account, and apply for the Upromise MasterCard. It’ll take minutes.
Plus, with more than 10,000 restaurants, stores, and other vendors associated with Upromise, earning that 5% cash back is a breeze.
Check out the Upromise website today to see why I’m in love and start saving for your kiddo’s 529 plan.
P.S. Did I mention it’s free to join?