Investing In Education

In the United States, higher education is often a helpful step to succeeding in the workforce. It’s also become a more expensive step. Tuition for in-state public universities has risen 211% since 2002¹ as many employers now demand a university-level education to even be considered for certain positions. Young people often don’t think about how they will pay for college and instead rely on expensive private loans saddling them with piling debt. At Vantage West, we seek to guide you to a financial future full of prosperity and opportunity. The first step to getting there is a secure plan. Read on to see how students as well as parents and guardians can finance an educational journey. 

Students

When it comes to saving for higher education, every little bit matters. Setting aside what you can today will help to lessen the burden of paying tuition or taking on loans. It is never too early or too late to start saving. We have compiled some resources to help students of all ages set aside funds for education. 

Super Saver Club 

Vantage West’s Super Saver Club is a youth savings program for young people up to 18 years of age and is a great way to promote financial responsibility from an early age. The program is designed to reward savings with a 1.00% annual percentage yield (APY) for balances up to $1,000 saved and 0.10% APY for balances over $1,000 saved. For reaching a savings goal of $500, each Super Saver will receive a $25 deposit to their account. ² 

Super Savers also receive a savings chart to start tracking their savings and help keep an eye on savings goals, as well as a coloring book that promotes healthy financial habits.  

Coverdell Education Savings Account 

A Coverdell Education Savings Account (ESA) through Vantage West is a high-yield account set up for the purpose of saving for higher learning expenses for a designated beneficiary under the age of 18. Members can contribute up to $2,000 per year and there is no maturity date or limit on transaction frequency. Withdrawals from an ESA are tax free when they are used for educational expenses. ³ 

Learn more about the ESA and see the current APY rates.  

Earn to Learn 

Vantage West partners with Earn to Learn, a nonprofit program that helps low-income individuals save for college. Qualified students enrolled with Earn to Learn can open a matched savings account, also referred to as an Individual Development Account (IDA). You set a monthly savings goal with an Earn to Learn financial counselor and start saving. Meanwhile, Earn to Learn applies an 8:1 match to your savings. These funds are then applied to your chosen college or university tuition. 

IDAs can only be opened by eligible students who have applied to and been enrolled in the Earn to Learn program. 

In addition to these special programs and accounts, there are some daily habits that can help you to save for college. Have a job or allowance? Determine how much of those earnings you need per month, then put the rest of the money into a savings account. 

While investing in your future education is important, so is investing in your current education. Earning good grades in school and being involved in extracurricular activities can help you to earn merit-based scholarships for your higher education. Schools want to see that you have a track record of working hard and being dedicated to your personal growth and development, and they are often willing to reward you for it. 

Parents and Guardians

Similar to the section for students, it is never too early for parents and guardians to start saving for a child’s education. You can even begin before a baby is born. The earlier you begin saving, the more time there will be for interest to compound and help add to your contributions. 

Consider saving just $25 per month starting when a baby is born. In a savings account with 0.30% annual percentage yield (APY), you could save up to $5,549.10 after 18 years, which includes almost $150 in interest. Now, imagine what you could save with a higher monthly investment. For example, $100 per month in the same savings account could accumulate up to $22,196 after 18 years, with just under $600 in interest.  

Results will vary depending on the initial investment, amount you choose to invest on a regular basis, and the APY of your account. Consider finding savings accounts with higher APYs and increasing your investment amount as ways to maximize your savings over time. 

Savings Accounts 

Consider setting up a separate account specifically for the child’s education. This can be a standard or premium savings account or a Coverdell Education Savings Account (ESA) described in the section above. Having a separate account will help to ensure that you do not withdraw your education funds and accidentally use them for other expenses.  

Automatic Saving 

Make saving for higher education easy by setting up automatic contributions. This way, you don’t have to think about or remember to put money into the savings account. This will help the account to grow at a steady pace. Consider scheduling contributions to happen on the same day that you receive your paychecks so that the contribution goes directly to savings instead of appearing in other account balances.  

Funding from Various Sources 

Sometimes it helps to get creative to find ways to save for education. Consider depositing items like your tax returns or bonuses—money you would not receive on a normal occasion. Birthday and holiday gift money is another great source for savings.  

You can also find ways to reallocate funds from purchases you make on a daily basis. For example, many popular coffee drinks currently sell for around $4 to $5. If you decide to not buy coffee just once a week and reallocate that price to your savings, you would be able to save up to an additional $20 per month. Or consider the price of day care for a child. After a child transitions from day care to public school, some parents and guardians decide to move what they would’ve been paying for that service into an education savings account.  

As the popular proverb goes, “it takes a village to raise a child.” Consider asking adults that are close to the child to contribute as well. Birthday and holiday gifts that contribute to education savings are a great way to show that people care for the child and their future. 

Contact us to learn more about saving for education and how Vantage West can help you reach your goals. 

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Disclosures: 

Subject to approval. Credit union Membership required. Rates subject to change. Rates for Regular Savings, Premium Savings, Super Saver Kids, and High Yield Money Markets are variable and may change after the account is opened. Certain restrictions may apply. Fees and other conditions could reduce the earnings on the account. Federally insured by NCUA. 

¹ https://www.usnews.com/education/best-colleges/paying-for-college/articles/2017-09-20/see-20-years-of-tuition-growth-at-national-universities 

² Annual Percentage Yield (APY) accurate as of 06/03/19. Rates are variable and subject to change. Account subject to approval. Certain restrictions may apply. Promotion offered for Super Saver Club accounts opened on or after 06/03/19. The APY will be calculated by applying one or more dividend rates to multiple balance ranges as set forth. The dividend rate for each balance range will apply to your account balance within each particular deposit balance range and not the entire account balance. When a child turns 18, the Super Saver Club account will convert to a Regular Savings account. There is a limit of one (1) Super Saver Club account, bonus, and gift per primary member. Account opening prize may vary based on availability. Proper identification required for all account owners at the time of account opening. The $25.00 bonus will be deposited to the Super Saver Club account within 10 days of the date the $500.00 savings level requirement is met. The account must be open and in good standing at the time the bonus is awarded. You must maintain a minimum $500.00 balance for at least 6 months. If the account is closed, or if the balance falls below $500.00, within 6 months of the bonus being deposited you will be responsible for reimbursement of any bonus awarded. Member is responsible for applicable taxes. Promotion subject to change without notice.  

³ Consult your tax advisor about IRA and Coverdell Education Savings Account eligibility, contributions, qualifications, and early withdrawal penalties. Maintenance fees may apply.