Online Banking

Online Banking Login

Forgot Username »|Forgot Password »

The complete guide to saving for your child’s college education, no matter their age.

College expenses are sky-high, and the cost is increasing every year. Like saving for retirement, saving for your kid’s education can feel daunting and impossible but just know the sooner you start, the more prepared you’ll be. Here are some tips for saving money for your child’s college education divided by age.

If your child is age 0-14

If your child is in this age range and you’re already thinking about their college fund — pat yourself on the back! You’re already ahead of the curve and in a great spot to put aside a good chunk of change for them.

Open a 529 account
A 529 plan is a tax-advantaged savings account that they can use to pay for education expenses. You can use this for many educational expenses from kindergarten to college to student loan repayments. You’ll maintain ownership of this account until someone withdraws the money so you can keep an eye on the amount saved.

There are a few tax advantages to this account. As long as the money stays in the account, no income taxes will be due on earnings. Once you or your child takes money out to pay for qualified education expenses, the withdrawals may be federal income tax-free. Contributions can’t exceed the expected cost of your child’s qualified higher education expenses and the limits vary from state to state, ranging from $245,000 to $529,000.

Open a Coverdell ESA account
A Coverdell Education Savings Account (ESA) is a tax-deferred trust account designed to help families fund educational expenses. It’s for parents or guardians who want to open an account for their kids when they are 18 or younger. These funds can pay for a variety of expenses for kids grades kindergarten to 12th grade.

Unlike a 529 account, ESAs are only available to families that fall within a certain income level. Contributors must have less than $190,000 in modified adjusted gross income ($95,000 for single filers). There is a contribution limit of $2,000 per year and the funds must be used by the time the student is 30. Otherwise, there will be taxes, fees, and penalties for any withdrawals.

Open a Star Savers account
At FMB, we know your kids mean the world to you and we wanted to offer an account that’s designed with them in mind. Kids from birth to age 19 can have a Star Savers savings account, but it’s not just a normal savings account. Kids in the program learn how to save and spend their money and receive fun perks and surprises in the mail (things like sweet treats, toys, and a birthday card with a gift) — all with the theme of saving money for the future.

Just stop by your local Farmers & Merchants Bank, talk to your friendly banker and open an account!

If your child is age 14-18

High school years are so pivotal in a teen’s life. They are realizing what they like to do and what they want to do after high school. Here are some saving tips for this age range:

Continue contributing to these accounts
The first tip is simple — continue contributing to the accounts listed above and on the flip side, open one if you don’t already have one! A small savings fund is better than no money at all. Just be sure to check age limits when you open the account.

Encourage them to save 20% of their paychecks
Most teens start working when they turn 16 which means it’s time to teach them smart spending and saving habits with their own money. Open a checking account for them (with us!) so they can deposit their paychecks and set up automatic contributions to their Star Savers savings account. We recommend saving 20% of a paycheck, but it’s up to you and them on what makes sense! This teaches them that saving money is important and should come first before spending.

Help them apply for scholarships & FAFSA
One of the best ways to help pay for your kid’s college expenses is to help them apply for scholarships and the Free Application for Federal Student Aid (FAFSA). Scholarships and grants are free money so take advantage of them! Start the conversation with your teen early in high school and start to make a list of what scholarships they should apply for. Gather your own financial statements and information to make applying for FAFSA an easier process. You’re there to help and support them in their financial journey and now’s the perfect time to do so!

If your child is in college

If your kid is already enrolled in college, then you’re seeing firsthand how expensive it is and how quickly it adds up. Between the cost of tuition, books, a meal plan, and room and board, hundreds of dollars turn into thousands in the blink of an eye. Here are some tips for reducing those expenses without having to forfeit the “college experience.”

Talk to them about buying used books
Shopping in the college bookstore and choosing brand new books is something every new college student enjoys. But buying used books can save you hundreds (if not thousands!) of dollars over those few years. There are also online books which in some cases, are cheaper than the hard copy. Encourage your child to do their research to find used books rather than buying new ones every semester.

Help them choose a realistic meal plan
A college cafeteria is a magical place, and the food options are endless. But ask any college student halfway through the semester if they still like the food, and you’ll hear mixed reviews. If your kid plans to come home most weekends or likes to cook their own food, consider choosing one of the cheaper meal plans, like a weekday one or even “pay as you go.”

Have a conversation about living options
When you think of the “college experience”, it almost always includes dorm rooms. If your child is attending a school that’s within driving distance of your home, talk to them about living at home and commuting instead. The cost of room and board is so expensive, and most students don’t know until they see the bill.

College isn’t as cheap as it used to be and that’s the reality. It’s up to you, your child, and your family to save money while reducing expenses so they can have the best experience and education. We know you can do it and we’re rooting for you!