College savings: How and when to save

When it comes to saving for a college education, it's true that the earlier you start the better. But no matter where you fall in the savings process, you can gain the tools, knowledge and guidance to lead you down the right path.

THE COST OF WAITING

Saving for college can seem overwhelming. Many people take a "wait until we can afford it" approach. But doing nothing or waiting to start saving can be costly. Starting now can reduce the burden of borrowing later.

Understand the costs

Parents who have a full understanding of costs and are actively investing are better positioned to avoid or minimize college debt.

Start saving now

Even if you feel like you've fallen behind in saving for college, start today. Waiting even one year will cost you in the long run and will force you to rely more heavily on loans and your current income.

Know your options

You can use savings, current income and loans to pay college bills, but relying on these alone can be costly. Tax refunds and bonuses can also be used to make additional contributions.

View a comprehensive case study (PDF)

FINANCIAL AID: UNDERSTANDING THE SYSTEM

One of the biggest misconceptions about saving for college is the impact assets may have on financial aid qualifications. Families may be surprised that the amount they're responsible for is determined mostly by parental income, not parental assets.

The impact of income

Family income makes a large difference on student aid index (SAI), and assets, such as money in a 529 plan, actually make a minimal impact.

Determine your needs

Financial need is the difference between the SAI and the cost of attendance. There's no guarantee that financial need will be fully met by a school's financial aid package.

Reaching your SAI goal

There are ways you can prepare for this cost such as opening a separate savings vehicle, applying for merit-based grants or leveraging advanced gifting strategies.

FAFSA Update: Why grandparents now have greater incentive to own 529 accounts (PDF)

*Student aid index (SAI) is formerly known as expected family contribution (EFC)

Disclosures

Please consider the investment objectives, risks, charges and expenses carefully before investing. Contact your financial advisor or visit www.columbiathreadneedle.com for a program description, which contains this and other important information about the Future Scholar 529 College Savings Plan. Read it carefully before investing. You should also consider, before investing, whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program.

Columbia Management Investment Distributors, Inc., member FINRA, is the distributor and underwriter for the Future Scholar 529 College Savings Plan Financial Advisor Program. The Office of State Treasurer of South Carolina (the State Treasurer) administers the program and has selected Columbia Management Investment Advisers, LLC. (CMIA) as program manager. CMIA and its affiliates are responsible for providing certain administrative, recordkeeping and investment services, and for the marketing of the program. CMIA is not affiliated with the State Treasurer.

There is no guarantee that the investment objective will be achieved or that return expectations will be met.