HONOLULU (KHON2) -- School is starting up again and education is top of mind for many parents out there, including sending the kids off to college. Grizel Nutter, a vice president with Central Pacific Bank stopped by Take2 Friday to share some tips on how to do so.
"Start saving as soon as possible so you can utilize the power of compound interest. Even small contributions can make a big difference over time. The sooner you start the more interest you will earn," Nutter said.
One of the options to save for college is a 529 plan.
"529 Savings Plans are tax-advantaged savings plans specifically designed for education expenses," Nutter said. "529 plans can be used for educational expenses, including tuition, fees, books, and room and board. Withdrawals are tax-free when used for qualified education expenses. Just note, you will pay higher taxes if that money isn't used for educational expenses."
There are other ways of paying for college as well that don't burden your child with student loans.
"People think saving for your kid to go to college is only saving money in a savings account, but there are other options," Nutter said. "We could also use your assets that you have to leverage paying for college. What's the biggest asset someone might have? Your home. We offer Home Equity Lines of Credit at a good rate where you can draw down at any time without spending all your cash. It is very convenient because you only pay for what you use. So, if you don't use it, you have no payments."
Nutter adds that other ways of saving include applying for scholarships and grants, working part-time while in college, choosing a less expensive college or major, living at home or commuting, and taking advantage of community college courses.
"The first two years are usually general education courses so you can save money going to a community college and then transferring to a four-year university," she said. "The cost of college varies significantly by institution and location. It's essential to research the estimated costs of your desired colleges and create a savings plan accordingly. Consider using online college cost calculators to get a better estimate."