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The Time to Save is Now

By Stacey Marcus


If the early bird catches the worm, what does the early college saver catch? According to Martha Savery, Director of Public Affairs at the Massachusetts Educational Finance Authority (MEFA), proactive parents derive a lot of benefits by starting to save for higher education for their children as soon as possible. “Two years ago we talked with a couple who was engaged to be married who wanted to learn about saving for college,” says Savery. “I encourage parents to not lose sight of saving for college by reminding them that for every dollar saved is a dollar they don’t have to borrow,” she notes.

A great way to start saving is through a 529 plan, a dedicated college savings plan with tax advantages. Along with tax breaks, 529 plans offer low maintenance, simple, and flexible ways for couples to start saving for their children’s higher education and stay in control of the investment. Each state sponsors its own 529 plans. Program managers and fees vary from state to state.

Massachusetts’ 529 plan is the U.Fund College Investing Plan which is administered by MEFA and managed by Fidelity Investments. A U.Fund account may be opened for as little as $50 and automatic contributions may be set up for as low at $15 a month. This is an affordable way to contribute to a structured savings program with great tax benefits. Your child can use the money to pay for tuition and fees as well as other expenses such as room and board and a computer at any accredited college across the country and even some international universities. In addition, because this is a college savings vehicle, the treatment of savings in a 529 plan in the federal financial aid formula is more advantageous than a general savings plan in the student’s name.

Massachusetts residents also have the option of exploring other states’ 529 plans as long as there are no residency requirements.

Five Smart Steps to JumpStart Saving for College Early

Savery offers these five tips as inspiration to start saving for college as soon as possible:

  1. Set a clear manageable goal in a college savings plan. Families that set a goal in a structured plan, like a 529 plan, are more likely to continue to contribute to that goal.
  2. The best way to save for college is to sign up for an automated deposit into the U.Fund (or other 529 plan) making it easy and seamless to save for college.
  3. Grab any opportunity you can to contribute to your child’s college fund. Get into the practice of allocating free cash to your savings plan and it will pay big dividends in the long run.
  4. Invite family members or friends to contribute to your child’s college fund in lieu of birthday or holiday gifts.
  5. When your children are old enough, help them understand the value of college. Have them set aside money that is dedicated to college savings and periodically contribute those savings into their U.Fund account.

Visit mefa.org to learn more about the U.Fund and planning, saving, and paying for college.