As the school year is back in full swing, many credit union members may be thinking about how to save for college - whether for themselves or their children and grandchildren. Saving for college can seem daunting, especially when trying to fund an education in the future, when college costs are likely to be higher.
Credit union professionals should let their members know that the best plan to save for college in their future of their children's future is to start as early as possible. Planning now can save them headaches later, and credit union professionals need to help members understand this. They should also set out the options for what types of financial products are available, and which may be best in certain circumstances.
Funding options like student loans
It's also important to talk to credit union members about the financial realities of college. Some may never have attended, while those who have may find their knowledge outdated by the time their children reach college age. For instance, it's not necessary to save for a whole four years of tuition necessarily, as loans, scholarships and grants are available. Lenders may also be more lenient about college loan approval than other loan types. Credit unions that offer college loans should discuss with members the ways in which these products can help supplement savings, too.
A traditional savings account may be an important part of a college savings plan for many families. This is especially good for people saving to go to college or send a child there within the next few years, according to Mapping Your Future. A savings account may be ideal to help children contribute to their own future education, which can also help credit union members begin to teach their children about money management. While using a child's own savings for college may not be enough, showing him or her how chores and summer jobs add up in savings can be a good learning experience, and can help defray at least some tuition costs.
Credit unions that offer 529 plans should make it known that they do so. The tax-advantaged savings plan is ideal for many credit union members. Professionals should be sure to explain both options: the savings plan option and the pre-paid tuition plan option, which is often sponsored by the government or a consortium of colleges and universities. There are benefits and drawbacks associated with both plans - prepaid tuition will lock in education based on current costs, but it's only valid at certain colleges. On the other hand, saving for college on a savings plan 529 means the funds are for use anywhere and for any college expenses.