Simple Ways to Save for College
January 22, 2018

Whether your child is 18 months old or 18 years old – saving money for their college education is a critical piece of your financial picture. As tuition prices continue to skyrocket, it’s more important than ever to have a strategy for handling the cost of higher education. Obviously, the sooner you start saving the better. The good news is there are several options that make the process relatively painless, allowing you to save while taking advantage of some tax perks too. Here is a bird’s-eye view of a few options:



529 Plans 

529 plans are a very popular college savings vehicle. Offered and administered by each state, they allow funds to accrue tax-free and withdrawals for qualified education expenses can be withdrawn without penalty. In a 529 plan, your after-tax contributions are invested in mutual funds or similar investments. Rules, fees, and tax advantages differ from state to state. Note that you do not need to invest in the plan for your home state – so shop around and find the state 529 plan that best suits you.

Prepaid College Tuition Programs

Like a 529 plan, these tuition programs are administered and managed by each participating state, so benefits and rules will vary. But, in many cases, prepaid tuition programs allow you to lock in current tuition rates, as you invest money into the savings plan. Again, there are risks, rewards, and differences in these plans across the country.

Traditional or Roth IRA

While an IRA is traditionally a retirement savings account, and funds withdrawn before the age of 59.5 are subject to penalties, there is an exception for funds withdrawn for qualified higher education expenses. Similar to a 529, money is invested in the IRA using after-tax funds. However, be aware of income and contribution limits.




Here is a way of saving while you are spending. Sponsored by Sallie Mae, Upromise allows you to earn cash back rewards on eligible purchases at over 850 major retailers. You can link your cash back rewards directly to a college savings plan or set up a goal saver account to hold your earnings. This is an easy way to add to your college savings accounts. Go to for more information.

Gift of College

Allowing family and friends to provide a gift in the form of funds directly into your college savings plan, Gift of College is an easy-to-use website providing another valuable way to plan and save for college. You can create an account on the website (, link it to your college savings plan, and then tell your family and friends. They can purchase gift cards directly from the website, or at retailers, such as Toys R Us. Funds from the gift cards can then be transferred directly into your college savings account.

These are just a few of the options available to help you save for the monumental cost of higher education. Contact us for more detailed information or to map out your college savings strategy.



Recent Posts

Tax Relief Options for Small Business Owners

Tax Relief Options for Small Business Owners

Taxes are always a challenge and can be a bit overwhelming this time of year as filing deadlines approach in the next few months. Even the savviest and most nimble business owners may have a hard time keeping track of all the changes happening to the tax code for 2022...

Tax Advisors – Worth the Cost?

Tax Advisors – Worth the Cost?

As you manage and grow your business it is important to make sure that you are spending money on services that provide a benefit in line with their cost. Decisions that you make can have a significant effect on your taxes and your overall profitability. For many of...

Understanding Your Net Worth & Planning For Your Retirement

Understanding Your Net Worth & Planning For Your Retirement

Proper financial planning involves more than living within your means, setting up an emergency fund, and saving for the future. These are great first steps toward financial freedom and security, but as you build your portfolio you will find additional considerations that need to be made.


Reach out for a consultation.

12 + 11 =

Diamond & Associates CPAs