COLLEGE SAVINGS 101

Savingforcollege.com

Be the Quarterback of Your College Savings Team
http://www.savingforcollege.com/articles/be-the-quarterback-of-your-college-savings-team-687

Posted: 2014-10-23

by Keith Bernhardt, vice president of college planning at Fidelity

In football, there are many factors that play into the success of a franchise. Top teams share four critical components: a decisive quarterback, a strategic coach, a creative playbook and the ability to work together as a cohesive unit. Saving for college isn't so different.

You're only as Strong as Your Team

The quarterback is one of the most important players in any lineup. They lead the offense, call plays on the field and unite the team towards its common goal: winning. Parents should see themselves as the quarterback of their college planning team. The first step in this role is to engage teammates on the current "roster," including their own children. According to Fidelity's 8th annual College Savings Indicator Study (CSI)1, 85 percent of parents agree that their children should help contribute to college savings. In fact, parents expect their children to pay an average of 35 percent of total college costs by contributing funds from their own savings, taking out student loans or allocating a portion of their income from a part-time job. It's never too early to start these discussions as a family, and to create a game plan that helps your kids understand their role in saving for college.

Parents can also add to the team's depth by asking grandparents and friends to contribute to college savings goals. Using an online college savings gifting service can help. An example is Fidelity's new service, giving parents the opportunity to create an online gifting page for their child, outlining college goals and aspirations. A link to the page can be shared easily through email or social media accounts, directing visitors to a child's dedicated 529 college savings account, where friends and family can consider making a gift.

A Coach Provides Direction and Leadership

Rookies and veterans alike rely on a coach to provide guidance and structure to help the team meet its goals. When determining the best approach for college savings, a financial professional can take on that coaching role. This year's CSI study notes that one-third of families are already seeking professional financial advice. Of those, 36 percent would like help from their advisors to determine the share of college costs that they and their children should bear.

A coach can also help their team overcome communication issues. Just 57 percent of parents with children aged 13+ have had discussions regarding how the family will pay for education. Among families using a financial advisor however, the prevalence of these discussions jumps to 65 percent. It's understandable that parents may need help navigating the college planning process, and reaching out to a professional - whether a financial advisor, school counselor or college planning expert - can open the lines of communication and help keep your college savings team on track.

Expanding the Playbook Helps in the Long Run

It's no secret that saving for college is a challenge. While planning to save enough to cover 64 percent of their children's college costs, the typical American family is on track to reach just 28 percent of that goal.

Fidelity suggests using the following steps as a playbook to help accelerate college savings:

  • Develop a roadmap - Parents that have a distinct plan are more likely to feel on track to reach their goal (52 percent) than those that do not (16 percent).
  • Open a 529 college savings plan - Families that use 529 accounts have greater monthly savings and are more likely to have discussed college savings with their children. As well, they get the benefit of tax deferred growth and federal income tax free withdrawals when used for qualified higher education expenses.
  • Turn spending into saving - Consider opening a rewards credit card that earns money towards college savings or re-allocate current daycare/afterschool care expenses to help fund the cost of college down the road.
  • Do your research - About half of parents say they need more education on the best accounts to save for college (49 percent) and where to go for advice on saving (50 percent). This lack of direction highlights the need for parents to be more proactive in educating themselves on these key issues. There are a number of tools, calculators and other educational resources online for self-starters, right here on SavingforCollege.com, as well as other organizations that work with families such as Fidelity.com/college.
  • Keep growing your college savings team - There are also a range professional resources available to families, who can help with the college saving and planning process, including school counselors, financial professionals and college planning experts. Seventy percent of families working with a professional feel confident in their understanding of how best to save for college.

The more parents prepare, the more success they're likely to have in attaining their college savings goals. Remember - get the full team involved, build your college savings playbook and don't be afraid to consult your coach along the way.

Keith Bernhardt is vice president of college planning at Fidelity Investments.

The UNIQUE College Investing Plan, U.Fund College Investing Plan, Delaware College Investment Plan, and Fidelity Arizona College Savings Plan, are offered by the State of New Hampshire, MEFA, the State of Delaware, and the Arizona Commission for Postsecondary Education, respectively, and managed by Fidelity Investments. If you or the designated beneficiary is not a New Hampshire, Massachusetts, Delaware, or Arizona resident, you may want to consider, before investing, whether your state or the designated beneficiary's home state offers its residents a plan with alternate state tax advantages or other benefits.

Units of the Portfolios are municipal securities and may be subject to market volatility and fluctuation.

Please carefully consider the Plan's investment objectives, risks, charges and expenses before investing. For this and other information on any 529 College Savings Plan managed by Fidelity, contact Fidelity for a free Fact Kit, or view online. Read it carefully before you invest or send money.

Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.



Fidelity Brokerage Services LLC, Member NYSE, SIPC,
900 Salem Street, Smithfield, RI 02917

699037.0
2014 FMR LLC. All rights reserved.


1Fidelity Investments, 2014 College Savings Indicator Study, August 2014

In football, there are many factors that play into the success of a franchise. Top teams share four critical components: a decisive quarterback, a strategic coach, a creative playbook and the ability to work together as a cohesive unit. Saving for college isn't so different.

You're only as Strong as Your Team

The quarterback is one of the most important players in any lineup. They lead the offense, call plays on the field and unite the team towards its common goal: winning. Parents should see themselves as the quarterback of their college planning team. The first step in this role is to engage teammates on the current "roster," including their own children. According to Fidelity's 8th annual College Savings Indicator Study (CSI)1, 85 percent of parents agree that their children should help contribute to college savings. In fact, parents expect their children to pay an average of 35 percent of total college costs by contributing funds from their own savings, taking out student loans or allocating a portion of their income from a part-time job. It's never too early to start these discussions as a family, and to create a game plan that helps your kids understand their role in saving for college.

Parents can also add to the team's depth by asking grandparents and friends to contribute to college savings goals. Using an online college savings gifting service can help. An example is Fidelity's new service, giving parents the opportunity to create an online gifting page for their child, outlining college goals and aspirations. A link to the page can be shared easily through email or social media accounts, directing visitors to a child's dedicated 529 college savings account, where friends and family can consider making a gift.

A Coach Provides Direction and Leadership

Rookies and veterans alike rely on a coach to provide guidance and structure to help the team meet its goals. When determining the best approach for college savings, a financial professional can take on that coaching role. This year's CSI study notes that one-third of families are already seeking professional financial advice. Of those, 36 percent would like help from their advisors to determine the share of college costs that they and their children should bear.

A coach can also help their team overcome communication issues. Just 57 percent of parents with children aged 13+ have had discussions regarding how the family will pay for education. Among families using a financial advisor however, the prevalence of these discussions jumps to 65 percent. It's understandable that parents may need help navigating the college planning process, and reaching out to a professional - whether a financial advisor, school counselor or college planning expert - can open the lines of communication and help keep your college savings team on track.

Expanding the Playbook Helps in the Long Run

It's no secret that saving for college is a challenge. While planning to save enough to cover 64 percent of their children's college costs, the typical American family is on track to reach just 28 percent of that goal.

Fidelity suggests using the following steps as a playbook to help accelerate college savings:

  • Develop a roadmap - Parents that have a distinct plan are more likely to feel on track to reach their goal (52 percent) than those that do not (16 percent).
  • Open a 529 college savings plan - Families that use 529 accounts have greater monthly savings and are more likely to have discussed college savings with their children. As well, they get the benefit of tax deferred growth and federal income tax free withdrawals when used for qualified higher education expenses.
  • Turn spending into saving - Consider opening a rewards credit card that earns money towards college savings or re-allocate current daycare/afterschool care expenses to help fund the cost of college down the road.
  • Do your research - About half of parents say they need more education on the best accounts to save for college (49 percent) and where to go for advice on saving (50 percent). This lack of direction highlights the need for parents to be more proactive in educating themselves on these key issues. There are a number of tools, calculators and other educational resources online for self-starters, right here on SavingforCollege.com, as well as other organizations that work with families such as Fidelity.com/college.
  • Keep growing your college savings team - There are also a range professional resources available to families, who can help with the college saving and planning process, including school counselors, financial professionals and college planning experts. Seventy percent of families working with a professional feel confident in their understanding of how best to save for college.

The more parents prepare, the more success they're likely to have in attaining their college savings goals. Remember - get the full team involved, build your college savings playbook and don't be afraid to consult your coach along the way.

Keith Bernhardt is vice president of college planning at Fidelity Investments.

The UNIQUE College Investing Plan, U.Fund College Investing Plan, Delaware College Investment Plan, and Fidelity Arizona College Savings Plan, are offered by the State of New Hampshire, MEFA, the State of Delaware, and the Arizona Commission for Postsecondary Education, respectively, and managed by Fidelity Investments. If you or the designated beneficiary is not a New Hampshire, Massachusetts, Delaware, or Arizona resident, you may want to consider, before investing, whether your state or the designated beneficiary's home state offers its residents a plan with alternate state tax advantages or other benefits.

Units of the Portfolios are municipal securities and may be subject to market volatility and fluctuation.

Please carefully consider the Plan's investment objectives, risks, charges and expenses before investing. For this and other information on any 529 College Savings Plan managed by Fidelity, contact Fidelity for a free Fact Kit, or view online. Read it carefully before you invest or send money.

Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.



Fidelity Brokerage Services LLC, Member NYSE, SIPC,
900 Salem Street, Smithfield, RI 02917

699037.0
2014 FMR LLC. All rights reserved.


1Fidelity Investments, 2014 College Savings Indicator Study, August 2014

 

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