Checklist: Saving for college

Want to save for college, but just don’t know how to get started? Take a deep breath and take the first step. The sooner you do it, the better. This college savings checklist can help you navigate the process.

Planning

• Gather up all of your financial documents listing your assets and debts. Consider meeting with a financial planner to see how saving for college fits your overall financial picture.

• Calculate how much you’ll need for college, given annual increases in tuition and related costs.

• Explore online financial calculators to help with budgeting. You can find a few at The Motley Fool, Bankrate, or ClearCheckbook.

• Discuss college costs with your teen, including private vs. public vs. community colleges, out-of-state tuition, living at home, work-study and part-time jobs, and transportation costs.

529 Plans

• A prepaid tuition plan and a college savings plan both offer great tax savings. Study both to figure out which will work better for you and your child.

• Study your state’s 529 plans and get more information at the College Savings Plan Network.

• Find out how your taxes will be affected. Also be sure to understand any related fees and expenses, limitations, withdrawal restrictions, investment options, and impacts on financial aid eligibility.

• Start making regular contributions as early as you can.

Coverdell Education Savings Accounts (ESAs)

• Learn about Education Savings Accounts (ESAs) that let you make an annual nondeductible contribution to a special trust account.

• Check out eligibility and contribution limits.

• Compare the advantages of an ESA with a 529 plan.

Individual Development Accounts (IDAs)

• Find out if you’re eligible for an Individual Development Account (IDA) that helps low-income families save for college by matching each dollar saved. There are more than 500 community-based and funded IDA programs in the U.S.