Disclaimer: This post may contain affiliate links. I would earn a little money with no extra cost to you. The opinions expressed are my own. Read my disclaimer to learn more.Do you know how much college costs?
[Updated April 2021]
Do your kids really know how much college costs?
Heck, do YOU know how much college costs?
The quick answer, a lot.
The long answer is, it’s complicated. It depends on the answers to so many questions.
- Is your child planning on going to a private or public college?
- Will he/she be going to an instate or out of state University?
- Does your child want to go to a 4 Year University or a community college?
These questions are just the tip of the iceberg. There is so much to consider when calculating the ridiculous costs of college that it’s just too difficult to predict the exact costs.
One of the biggest challenges facing families is how much to save, and HOW to save money.
I have a pretty great solution for you that’s easy to get started and will help you consistently save money for your child’s education.
It’s called CollegeBacker.
I’ve worked with them for a few years and use it to invest money for our daughter’s college education.
If you’re ready to get started right now, click this link and head straight to CollegeBacker and open your 529 savings account.
If you’re here for more information and a full review on CollegeBacker, keep reading.
Let’s start with a few challenges to saving for college and avoiding a mess of student loans.
Challenges Facing Families Trying to Save for Child’s College
I asked friends and family three questions about saving for their kid’s college education. Here’s a brief summary of the most common responses.
Are you planning on saving for your kid’s college education?
- Everyone I asked said yes to this. A few added that they plan to teach and encourage their kids to save for themselves as well.
- Some have already started saving, while others haven’t nailed down a plan yet.
- Yes, but I’m not sure what is a reasonable amount
If yes, do you have a plan set up?
- A few said no.
- Others had 529s, but closed them and opened Roth IRA in case kids don’t go to college.
- Currently putting money aside in a traditional savings account.
- Yes, but opted out of a plan that requires funds to be used for education expenses, especially if kids don’t go to college
- Have something set up, but don’t contribute regularly
What’s keeping you from saving?
- Nothing, we contribute regularly
- Contributing to their own savings goals instead
- Keeping up with regular bills and expenses
- Retirement savings
- Can’t afford to set anything aside
- Unsure what is reasonable or expected for parents to contribute
Thank you to everyone who shared your experiences. I really appreciate your feedback! You all rock!
All of their responses brought me to these questions that I’ve worried about as a parent, and maybe you do too.
- College is expensive: I’m living paycheck to paycheck. If I can’t save money for myself, how can I do it for my kid? How can I do it for multiple kids?
- The gap between inflation and student loan inflation is increasing. Student loans are inflating at a higher rate than inflation
- How can I save money for college if I’m still paying off debt?
- How can I prioritize saving for college vs saving for my own retirement?
- I still have student loans, I don’t even want to think about my kid’s student loans!
- How will my kids pay for college?
- How much can I contribute to help them?
- Should I even help my kids pay for college?
- College is expensive now, how much more expensive will it be when my kids are 18?
Feeling overwhelmed yet?
Sorry about that. Hopefully by the end of this article you’re feeling more hopeful.
Let’s dig deeper and find a better way to get your kids to college.
Seriously Though, How much Does College Cost?
According to a recent survey by College Board, the average costs for ONE YEAR of college was $24,610 for the 2016-17 academic year. YIKES!!! If you’re thinking private education is the best route, look to drop $49,320 for the year.
No wonder the average 2016 college graduate had $37,172 in student loan debt!
A lot goes into these numbers such as tuition, room and board, books and supplies, and all of the fees. Still, that’s a huge freaking number.
Those big scary numbers are based on a 4 Year University, so if you’re looking at a community college or tech school, the costs will be significantly lower.
What can we do about all of this? Is there an easy way to help your kids pay for college?
Let me tell you about CollegeBacker.
What is CollegeBacker?
CollegeBacker’s mission is to help every family send kids to college. That’s a pretty admirable goal if you ask me. The company helps families create a 529 savings plan to give the gift of college to their kids.
Setting up a new account is easy and you can get started in less than 10 minutes.
It’s crazy simple. But don’t let that fool you into underestimating its potential and value.
We started a 529 account with CollegeBacker when our daughter turned one. At age three, she has $6,200 with a projected value of $36,000 when she turns 18.
We contribute $50 a month, and extra with tax returns and extra paychecks. Every little bit helps.
See, I told you it’s possible to save money to help your children go to college.
They even have an app to help you manage your 529 savings plan right from your smartphone.
What are the Major Benefits of CollegeBacker?
Like I said before, you can set up your 529 account with CollegeBacker in about 10 minutes.
More on what a 529 savings plan is in a minute.
Here are a few of the awesome features CollegeBacker offers your family.
1. Automatically Calculates Savings Goals
The chart below is straight from the CollegeBacker website.
You can mark when your child’s age and calculate how much you need to contribute each month to reach your savings goal.
If your goal is to save as much as humanly possible (that’s us), then you can use the savings calculator to see how much money you can save with your current budget, and even motivate yourself to contribute more and boost your child’s college savings.
CollegeBacker isn’t just a normal savings account. It’s an investment account, so it offers higher returns than a savings account.
I love that this graph also shows how the power of investing your money affects your returns! The difference is over $20,000 from a traditional savings account!
Which means that the sooner you start investing, the more money you’ll have for your child’s education.
If we invest $100 a month, but start when our kid is 9 instead of right away when she’s born, we would only reach 33% of our savings goal.
It’s only half the time, but the amount is $30,000 lower! It’s great evidence that time in the market is crucial.
It’s amazing what a little compound interest and time can do.
2. Gifting Link – Invite Friends and Family to Give and Contribute
You’ve probably heard the term, “it takes a village” when referring to raising kids. CollegeBacker believes the same is true for sending your kids to college.
If the costs of college are overwhelming, or you’re already having a hard time saving, invite the rest of your “village” to help.
When you create an account with CollegeBacker, you also get a unique link to your child’s 529 savings account. You can send this link to family and friends who are interested in donating money to your child.
The link goes directly to their account, so it’s easy to contribute whatever amount they want.
You’re getting ready to celebrate your child’s first birthday. Turning one is a BIG DEAL! Your friends and family are all gathered around your little munchkin and a giant mound of gifts. When you finish opening them, your one year old has a whole toy box full of toys, books, and clothes.
Of course your kiddo will fall in love with some gifts, and the outfits are going to be SO CUTE! But over time, your baby will move onto bigger clothes and new favorite toys.
The memories will be great, but the gifts will all eventually fall by the wayside.
Imagine instead you give your friends and families a more creative option to gift your child. You send them a link with your child’s 529 savings account and let them give the gift of college education!
It gives your friends and family a new option.
Let’s be honest, gift giving stresses some people out, and giving money is WAY easier. Plus, now you don’t have as many loud, noisy toys to step on in the middle of the night! 🙂
You can even include the link on the birthday invitation. That way people can donate even if they can’t come to the party. Donations are accepted with debit or credit so giving is as simple as buying something on Amazon.
Now you’ve truly got the power of a village helping your child receive the gift of an amazing education!
And don’t forget about high school graduation. You can send the link back out to everyone on your grad party guest list!
3. Pay as Little as $1 a Month for Your 529 Account
CollegeBacker believes in helping EVERY FAMILY save money for their kids to go to college.
So, they let anyone start an account for as little as $1 a month, and your first month is free.
Yep, that’s not an exaggeration or trick. There are no extra fees and no minimum contribution. You can start with as little as $1.
This makes saving for college accessible to anyone! Contribute what you can, even if it’s only a dollar at a time. Every little bit helps!
One thing I love about CollegeBacker is that it’s meant to be accessible to ALL FAMILIES! This is all part of CollegeBacker’s mission to help every family send their kids to college. That includes YOU!
4. Bank Level Security
This one is pretty important.
Straight from the front page of their site,
“We use state-of-the-art browser encryption technology, maintain secure servers with 24/7/365 staffing, and use identity verification services to protect your personal information. We never share your private data with any third party without your permission.”
Your personal information is important and private. CollegeBacker makes sure it stays that way.
Ready to open your 529 account with CollegeBacker? Click here to get started.
What is a 529 Savings Plan?
I told you I’d talk more about a 529 savings plan. Here we go.
A 529 savings plan is designed to help and encourage families to save for their children’s college education. It’s primary purpose is to offset costs of tuition, books, fees, and other supplies.
529 refers to the tax code used by the IRS and shows that it doesn’t need to be taxed. Think of it like a Roth IRA for college expenses.
Instead of storing money in a traditional savings account, a 529 invests your money so the money you save works for you and will cover a higher percentage of your kid’s tuition than if you used a regular savings account.
It’s even better than a high yield online savings account.
Major Benefits to Using a 529 Savings Plan
1. 529 Accounts Cover College Expenses
There are so many expenses that go into paying for college, as I mentioned earlier. So, which of those expenses can you actually use the 529 for? The good news is it’s a lot more than just tuition.
- Tuition and fees
- Room and board
- Computer and related equipment
Of course this isn’t everything, but holy cow is it a lot. Tuition, fees, room, and board make up a huge portion of college expenses, so most all of your child’s expenses will be eligible.
2. You Can Use a 529 Account at a lot of Different Schools
The general rule of thumb is if the school receives federal funding, then you can use your 529 plan to pay for expenses.
A 529 is pretty flexible and can be applied toward universities, trade schools, and technical colleges.
CollegeBacker can help you find out if your school accepts 529 funds.
3. 529 Savings Plans have Minimal Impact on Financial Aid
Financial aid calculates the total estimated costs of college compared to the total expected family contribution.
The difference between those two numbers determines financial aid.
If the Department of Financial Aid believes there will be a major family contribution, your child will be offered LESS aid in the form of grants, scholarships, and loans.
According to Educationdata.org, 86.4% of first year college students receive some sort of financial aid. That’s a lot!
Here’s where the added benefit of a 529 account makes a HUGE difference with the FAFSA.
A 529 is considered a parent asset and is assessed at about 5% of the value of the total amount in the account, as long as it’s in the parent’s name.
Compare this to a savings account in the student’s name which is assessed at around 20% for financial aid.
There is still a slight impact, but it’s a much better route to go than a typical savings account.
4. 529 Accounts are an Investment, Not just a Savings Account
Money will be worth more as an investment than a saving account.
You have a better chance to keep up with student loan inflation. The costs of college are only going up, so this is a great way to get an advantage.
What’s the risk of Opening a 529 Savings Plan with CollegeBacker?
If you’re feeling cautious about investing money instead of just putting it into a savings account, it’s okay.
Any type of investment carries some element of risk, even retirement investing like IRAs and Roth IRAs. However, IRAs are pretty safe and secure investments that grow over time.
The same thing happens with CollegeBacker, as expert investors manage your portfolio and invest according to your individual goals.
Investing tends to be more aggressive at first, but becomes more conservative as your kid gets older and closer to entering college.
For more details on a 529, check out Vanguard for a more extensive breakdown of features.
Is CollegeBacker Legit?
I’ve worked with CollegeBacker for a few years and I do my homework on companies I partner with.
Two things to remember about CollegeBacker:
- CollegeBacker doesn’t actually hold any of your money. They make the process of opening a 529 account easy and accessible to everyone. No need to contact a broker.
- CollegeBacker uses bank level security to keep your money safe.
If anything happens to CollegeBacker, your money is still safe. Remember, they don’t hold your investments. Your money will be safe in your 529 account.
We’ve been enjoying watching our own daughter’s investments grow.
There are other options to help you save money for your child’s future, but CollegeBAcker is easily at the top of the list and is specifically great for saving for college.
Plus there’s always the question…
What if my kid doesn’t go to college? What happens to the money?
If your kid doesn’t go to college you have a couple options.
- Transfer the account to a different family member to use for education
- Withdraw money at a 10% penalty plus taxes at your current income tax rate
They aren’t the best options, but your money won’t be wasted if your child doesn’t go to college.
If you want more flexibility for how your child uses the funds – for their wedding, buying a house, or their first car – you might want to consider UNest.
Are You Ready to Give CollegeBacker a Try?
CollegeBacker is engineered to make saving for college easy, accessible for all, social, and even fun!
One of the biggest takeaways to remember is the sooner you start saving, the more money your children will have to help pay for college.
A 529 account through CollegeBacker is a simple, stress free way to start investing and save money for your child’s college education.
You can get started in less than 10 minutes.
If you’re ready to start saving for your kid’s college, click here to open an account with CollegeBacker.