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Resources > College Support > The Best Way To Save for College in 5 Years—A Comprehensive Guide

The Best Way To Save for College in 5 Years—A Comprehensive Guide

While many parents rush to start a college fund as soon as their child is born, you can still collect a significant sum by the time your child starts college if you start saving a bit later. After all, a savings fund isn’t the only college funding resource—you can rely on alternative savings and financing options to gather the amount you need.

If you only have a few years left to save for your child’s higher education, this guide will show you the best way to save for college in five years and do so efficiently.

What if You Started Saving for College Too Late?

The thought of your child already preparing for college can be scary, especially if you haven’t saved a substantial amount of money to fund their higher education. However, look at the bright side—you may not even need the savings.

According to recent statistics, the U.S. Department of Education awards around $46 billion in scholarship money every year. If your child applies for a scholarship and gets it, their college expenses will be fully or partially covered by the reward money. There’s a wide variety of scholarships available, including:

  • Athletic scholarships
  • Need-based scholarships
  • Scholarships based on academic merit

Your child can apply for as many scholarships as they like, and they don’t have to pay back any money they receive this way.

If your child has high test scores, good grades, and outstanding accomplishments, they can apply for a full-ride scholarship that would cover their tuition, books, room, and board.

What Are the Best Ways To Save for College in 5 Years?

Five years may not be enough time to save money for all college expenses, but it’s still plenty of time to collect a decent sum and be at least partially ready to fund your child’s college. However, instead of looking for the single best way to save for college in five years, combining multiple saving options can help you accumulate the funds faster. 

Whether your child starts college in two, four, or five years, the following tips should help you set aside a sufficient amount of money or work out alternative ways to pay for college. Here’s how to save for college fast and effectively:

  1. Start a savings account
  2. Explore unconventional savings plans
  3. Commit to a monthly contribution
  4. Keep saving through college
  5. Cut down on spending
  6. Ask your child for help
  7. Rely on family and friends

Start a Savings Account

Establishing a college savings account can help you keep track of your funds more easily and save more in the long run by earning a return on your investments. Statistics show that, on average, parents saved $5,143 for college in 2023. If you annually invest a similar amount in a savings account, you could accumulate over $25,000 in five years.

There are many savings account options available, but 529 plans and prepaid plans are the most common. However, you should choose your savings account after thorough research and a discussion with your financial advisor. Make sure to consider the risk level you’re comfortable with and look into any investment fees your chosen savings account may have.

Explore Unconventional Savings Plans

Besides popular savings plans like 529, there are some unconventional savings methods you can consider while saving for your child’s college. These include:

  • Trying a college savings rewards program—Cash-back rewards programs like Upromise let you shop online at participating retailers and have a portion of the money you’ve spent deposited into your college savings account. You can even invite friends and family to register their credit and debit cards with the service so your college fund gets more contributions when they shop
  • Obtaining a home equity loan—Borrow funds and use your home as collateral. This way, you can repay the loan with a fixed-rate interest and set this money aside for college
  • Putting money into savings bonds—Buy savings bonds online, redeem them, and use the earnings as your college fund. There’s almost no risk involved, and this money is guaranteed by the government

Commit to a Monthly Contribution

The best way to save the exact amount you’ve planned for college is to commit to making monthly contributions. The amount you set aside each month should depend on how much money you can afford to save. A good place to start would be contributing 10% of your discretionary income every month.

Monthly contributions can also help you determine what kind of college you can afford. If private institutions exceed your budget, consider more affordable options like:

  • Local colleges—With your child attending a local college, you may not have to save for room and board as they can live with family or friends instead
  • Community colleges—These institutions are among the most affordable options, and they often offer scholarships and grants
  • Two-year institutions—If your child attends a two-year college instead of a four-year one, you can cut your expenses in half

Keep Saving Through College

The beginning of college doesn’t have to be the finish line for your savings. While many parents try to save enough to cover four-year tuition before their child goes to college, saving throughout their college years can feel less overwhelming and still help pay for all or most college expenses.

For example, instead of investing in your 529 plan while your child is in high school and stopping when they graduate, consider investing money during their college education as well. This would allow you to set aside less money on a monthly basis because you’d have time to reach your savings goal in eight years rather than four.

Cut Down on Spending

If you feel like your monthly savings should be higher, consider cutting down on unnecessary spending. This would include eating in restaurants less frequently or not taking expensive trips for a few years. Essentially, try to cut out anything you can live without until your financial situation stabilizes. If this isn’t enough, you may even consider downsizing your car or moving into a less expensive home for a while.

Ask Your Child for Help

While many parents believe it’s their duty to pay for college, there are also those who think parents shouldn’t have to pay for college—at least not fully. The percentage of parents and children sharing college expenses has increased, with a recent survey showing that 30% of student participants are helping their parents pay for college. 

If you’re behind on your savings and don’t want to borrow money, you may talk to your child about taking a gap year. This additional time can help you save the remaining funds together. They could use this time to work to collect funds, and in the meantime, they’d gain experience that may prove valuable for scholarship or grant applications. 

If the gap year is out of the question, your child can still help you by:

  • Saving birthday and holiday money for college
  • Maintaining good grades to increase the chances of getting a scholarship
  • Working part-time while in college

Rely on Family and Friends

Besides your child, you can turn to family and friends for help. Talk to those who usually give your child birthday and holiday presents and let them know you’d prefer it if they made contributions to your child’s college savings account instead. This is a great way to save money for college over time since even small contributions will accumulate to a larger sum in the end.

Best College Funds for Children

If you’re looking for the best college saving plans for kids, consider these options:

  1. 529 Plans
  2. Coverdell ESA
  3. Custodial Accounts
  4. Roth IRA

529 Plans

529 plans are typically sponsored by state governments, and they have no contribution limits or minimum distributions. The money you withdraw from 529 plans won’t be taxed if it’s used for college-related expenses like books, supplies, room, and board. These plans are also low risk, so you’ll likely get a return on your investments in the process.

Coverdell ESA

A Coverdell Education Savings Account (ESA) is an investment account that’s not limited to college funding. You can use it to fund your child’s education during elementary school, secondary school, and college. Like with 519 plans, your contributions and deductions aren’t taxed if you use the fund to pay for education-related expenses.

Custodial Account

A custodial account is a savings account that you can control on behalf of your child until they reach legal age. After that, your child becomes the account owner and can use the money as they wish. You can withdraw money from custodial accounts without any penalties if you’re using the funds for the child’s benefit. However, the return you earn is taxed at the child’s rate since they’re the actual owner of the account.

Roth IRA

The primary purpose of a Roth Individual Retirement Account (IRA) is to save money for retirement, but you can also use it to save money for your child’s college. Any funds you withdraw from this account, including the return you earned, are tax-free after you turn 59½. Otherwise, you’ll get a 10% penalty of the withdrawn amount on your earnings. As for your contributions, you can withdraw them tax-free at any time, at any age.

What if You Haven’t Saved Enough?

If your child is about to leave for college and you still haven’t saved enough money to pay for it, it might be time to consider loans and free aid options. Since it’s unlikely you’ll be able to save a sufficient amount in under a year, you should try the following:

  1. Apply for federal financial aid
  2. Consider private college loans

Apply for Federal Financial Aid

Obtaining a loan shouldn’t be your first option for funding college since you’ll eventually have to return the borrowed sum. If you’re considering financial aid, filling out the Free Application for Federal Student Aid (FAFSA) is a great place to start. Other than being need-based, federal aid doesn’t have strict eligibility requirements, so your child’s chances of getting approved are high. However, make sure you apply early—FAFSA’s funds are limited, so late applicants may not be able to get financial aid.

Apart from financial aid like scholarships and grants, you can also consider federal loans like Direct PLUS loans, which offer two options:

  1. Parent PLUS—A Direct PLUS federal loan made to an eligible parent borrower
  2. Grad PLUS—A Direct PLUS federal loan made to a professional or graduate student

Consider Private College Loans

If you still need some money to cover supplies, books, room, and board, private loans are a great option. They’re typically offered by private institutions like banks, credit unions, or online lenders. These loans aren’t usually used as the main college funding option as they have stricter eligibility requirements than federal loans, but they may help if you need the extra cash.

One of the crucial factors that can determine whether you’ll get approved for a private student loan is your credit score. When cosigning a private student loan, some lenders require credit checks for both the parent and the student. If your and/or your child’s credit score doesn’t meet the lender’s standards, you may not be approved for the loan.

A great way to boost your child’s chances of obtaining a private loan is to subscribe to a credit building service like FreeKick. The platform helps you build a strong credit profile for your child starting as early as the age of 13, making their chances of passing the credit check significantly higher.

FreeKick—The Best Solution for Credit Building and ID Protection

FreeKick is a combination of an FDIC-insured deposit account and various services provided by Austin Capital Bank. Its main features include credit building, credit profile monitoring, and identity protection for up to two adult parents and six children. The platform’s credit building service helps young adults and minors between the ages of 13 and 25 establish a strong credit profile from an early age.

Parent-Sponsored Credit Building With FreeKick

An early start at credit building ensures your child will have more financial aid options in college and a solid financial future. In fact, by establishing a good credit profile from a young age, your child can save more than $200,000 in their lifetime.

This is why FreeKick lets you build credit for your child from the age of 13 through parent-sponsored credit building. Here’s how to get started: 

  1. Create an Account—Visit FreeKick.bank and opt for a plan that fits your needs and budget
  2. Set It and Forget It—Once the account is activated, your child’s credit automatically starts building over the next 12-month period
  3. Keep Growing—After the first 12 months go by, you can either close the account and get your full deposit back or renew it and keep building your child’s credit

Comprehensive Identity Protection With FreeKick

Recent statistics reveal that a child’s identity is being stolen every 30 seconds, which is why you should do everything in your power to protect your child’s identity.

Once your child starts college, you should be even more cautious as students are one of the groups most frequently targeted by identity thieves. This is why FreeKick offers comprehensive security features for monitoring and protecting the identity of both adults and minors:

Services for Adult Children and ParentsServices for Minor Children
Credit profile monitoring
SSN monitoring
Dark web monitoring for personal information
Up to $1 million identity theft insurance
Full-service white-glove concierge credit restoration
Lost wallet protection
Court records monitoring
Change of address monitoring
Non-credit (Payday) loan monitoring
Free FICO® Score monthly
FICO® Score factors
Experian credit report monthly
Credit profile monitoring
SSN monitoring
Dark web monitoring for children’s personal information
Up to $1 million identity theft insurance
Full-service white-glove concierge credit restoration
Sex offender monitoring—based on sponsor parent’s address

FreeKick Pricing

FreeKick’s plans are suitable for every family’s budget. There are two plans available, and the deposits are FDIC-insured up to $250,000. See the details in the table below:

FDIC-Insured Deposit AmountPlan Fee
$3,000$0 (Free)
No deposit$149/year

Help your child secure their financial future by starting their credit building journey early and keep your family protected from the risk of identity theft—sign up for FreeKick today.