“What I Want to Be When I Grow Up” Sallie Mae Survey and Giveaway

One in five American families with children who are likely to attend college name saving for higher education their top priority, according to How America Saves for College, conducted by Gallup and Sallie Mae, the nation’s No. 1 financial services company specializing in education.

According to the study, 60% of parents have saved for their child’s college education and are on track to save $48,367 on average by the time their child turns 18. Most savers (60%) use at least two savings vehicles, and the number of options utilized increases with income. General savings accounts and CDs are the most popular (50%) followed by interest accounts (34%). Eight percent save through a college rewards saving program, such as Upromise.

Twenty-four percent risk their financial future by using retirement accounts to save for college and make other costly mistakes by not investing in tax-advantaged options, such as 529 college savings plans.

For the nearly half of those not saving for college, respondents reported that they do not know how (18%) or are not sure which are the best college savings options (28%). Sallie Mae offers these tips for families to help them get an “A+” for their college savings plans:

For Parents of Children, All Ages:

• Build a plan. First, understand the full cost of college and build a plan to save for it. Sallie Mae’s free Education Investment Planner helps calculate and compare future college costs at more than 5,500 college and graduate schools across the country and provides an age-based estimate of how much to save. It helps users explore the different ways to pay for college (based on savings, scholarships, grants and student loans) and helps families predict the student loan payments once the child graduates. Families can create a savings goal and set up automatic deposits of $25 or more a month or deposit money annually as budget allows.

• Start saving as early as possible in a dedicated college savings account. As mentioned above, most families save for college using two to three savings vehicles. Consider the following options:

• • Build college funds tax free. 529 college savings plans are tax-advantaged ways to save for college, have no income limitations, and are easily transferable to another beneficiary if needed. Most 529 plans are sponsored by a state and many offer a state tax incentive or other benefits to residents (check 529.com for information on each state’s tax advantages). Family members can enroll in any 529 plan regardless of the state of residence without taxes or penalties. Earnings grow free of federal income tax as long as the withdrawals are used for qualified education expenses. Contributions to a 529 plan can be up to $13,000 ($26,000 if married filing jointly) a year or up to $65,000 ($130,000 if married) at once as long as no additional gifts are made to that beneficiary over a five-year-period.
  • High-yield savings and Certificate of Deposit accounts: Sallie Mae’s savings and CD accounts are low-risk investment options with competitive interest rates (often one of the highest in the country), no monthly fees and no minimums. In addition, the high-yield savings accounts offer the ability to earn extra Upromise rewards to help your money grow.

• Save more with Upromise by Sallie Mae. Earn extra money for college through Upromise. Since its inception 10 years ago, Upromise members have earned $600 million in college savings, the equivalent of a college education for 20,000 students. Joining Upromise is free and rewards members for eligible everyday spending with hundreds of participating merchants and by making purchases with the Upromise World MasterCard. Earnings can be invested in certain tax-deferred 529 plans, deposited in a high-yield savings account, used to pay down an eligible student loan or simply request a check. Even friends and family can sign up.
• Give the gift of education – especially during the holidays, birthdays and graduation. Sallie Mae’s How America Saves for College with Gallup found that 16 percent of families had help with college savings, with an average amount of $9,243 from family and friends. Thirteen percent of parents rely on gifts into college savings accounts as their primary way to save for college.
• Ugift with Upromise. With Ugift, gifts can easily be given directly to a child’s 529 college savings account administered by Sallie Mae’s Upromise Investments. Giving through Ugift has totaled more than $12 million since 2008.

• Put your employer to work. Check your benefits at work as many companies offer employees the ability to contribute to a 529 plan through ongoing payroll deduction.

• Kids can save too. Kids as young as school-aged can contribute to their future by setting aside money from a weekly allowance in their college savings account. Older kids can deposit earnings from baby-sitting, summer jobs or working part-time. It adds up over time and is an important reminder of their goal to attend college and a good lesson on saving.

For Parents of Juniors and Seniors in High-School:

• Apply for scholarships: The best way to pay for college is free! Sallie Mae’s free scholarship search connects you with 3 million scholarships worth over $16 billion, and is expanded and updated daily. More at SallieMae.com/scholarships.

• Fill out the FAFSA. Get ready – after January 1, students planning to attend college in the Fall should complete the FAFSA, a must-do for students looking to tap not only federal aid but also most state aid offerings. More at SallieMae.com/fafsa.

• Spread out your tuition payments. Tuition payment plans let families divide their tuition payments over a number of months instead of making a large lump-sum payment at the beginning of the semester. Visit www.SallieMae.com/tuitionpay for more information.

• Check out federal student loans, first. If you need to borrow, look at federal student loans first and then consider a responsible private loan option if you still have a gap. Yearly federal loan limits range from $5,500 for dependent student freshmen to $7,500 for college seniors.

• Be smart about private loans. Private loans are not created equal so be sure to do your homework. Sallie Mae’s Smart Option Loan encourages students to make at least small payments while in school and comes with shorter terms after graduation. These features can translate into savings of as much as 30 to 50 percent in interest charges over the life of the loan and a 5-to-8 year faster pay off time (compared to the conventional deferred private loan in which all interest builds up during a school with a standard 15-year term). More at SallieMae.com/loansmart.

• Stop by the financial aid office. Talk to your campus financial aid office, especially if your family finances have changed since you’ve received your award letter.

• Claim tax credits and deductions. Be sure to claim the tax credits and deductions you’re eligible for on your income taxes.

Survey Links: https://www.surveymonkey.com/s/salliemaegrowupsurvey

Results will be tallied and published mid-July

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