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When it comes to saving for college, panic shouldn’t be your chief planning tool. Ditto for denial.
No matter your income there are solutions that will make a measurable difference in your ability to pay for college when the time comes. And experts all agree on one thing—the worst thing to do is wait. Start small, but definitely start. The most popular options for college savings are “529” plans and rewards programs such as Upromise, which also has its own 529 program.
A “529” plan refers to the Internal Revenue Service section that describes this ‘tax-advantaged’ investment vehicle. Specifically, all 529 plan earnings and distributions are exempt from federal tax when used for qualified educational expenses, such as tuition, room and board. It’s important to note that your contributions into the fund are still taxed. State tax breaks will vary.
Upromise by Sallie Mae is not a typical savings plan, but a shopping rewards account where you earn cash back by shopping at retailers, restaurants and other establishments. The account can be linked to an existing debit or credit card. You can expect to earn anywhere from 1 to 25 percent cash back depending on seasonal incentives, which can be used toward tuition, student loans or even taken as cash rewards.
For all plans you’ll need your personal information and that of your beneficiary, as well as any bank information for electronic transfers.