An education is one of the greatest gifts a child can receive, but the price tag for this gift is getting more expensive each year.
College students are graduating with student debt that they feel is hanging over their heads and keeping them from moving on financially. More than half of college students graduated with more than $10,000 of student loan debt.
And the cost of college is only growing each year, according to Bloomberg Business. However, for parents of students not yet in college, there are several simple ways to start saving now.
529 college savings plan
A 529 plan is an account that is specifically used for education costs, like tuition, books and housing, at any accredited school, Danielle Douglas-Gabriel reported for The Washington Post.
These accounts are not taxed and many people can contribute to them, yet only 3 percent of people use these accounts, Douglas-Gabriel reported. Be careful because some 529 plan options do have fees to be aware of.
This option allows you to place stocks, bonds, annuities or cash into a custodial account for your child to use later, Christina Couch reported for Bankrate.
The money in these accounts isn't required to be used for education and is more controlled by the children rather than the parents compared to 529 plans, according to Couch.
Granted, schools take the amount of money into consideration when they are deciding how much financial aid to offer students.
When it comes to tax credits, you have two options: the American Opportunity Tax Credit and Lifetime Learning Credit, according to CNN.
With these two, which have different income level restrictions, you can cut your taxes by up to $2,500 per child in college per year and $2000, respectively, CNN reported.
Rethink if you can’t afford
If you haven’t planned far enough ahead or face unexpected costs, look into what other options are available. Many schools offer dual enrollment or Advanced Placement courses, that may help knock out some college credits at college, Geoff Williams wrote for U.S. News.
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