Starting early to save for expense of college
Researchers see spike in young people saving for higher education
PITTSBURGH — About halfway through high school, Raymond Buehner and Halle Celebrezze came to terms with how expensive a college education would be and that a large share of the financial responsibility would fall on their shoulders. Both began stashing away money from their part-time jobs.
“I’ve been saving a lot since I started this job,” said Buehner, 18, who recently graduated from North Hills High School in Pittsburgh. He has been working 20 to 30 hours a week at a family farm called Soergel Orchards outside the city for the past two years. He plans to attend Slippery Rock University this fall and major in finance.
“I have my own savings account I control,” he said. “I like to take charge of my own finances. This job has given me good experience. Working the cash register has helped me to be more accountable with money.”
While there is nothing new about high school students working and saving for college, researchers at the Washington, D.C.-based College Savings Foundation are seeing a spike in the number of young people going that route.
In its seventh annual report on college savings trends, the College Savings Foundation found more high school students saving their own money for college this year than in any previous year tracked. The survey found 60 percent of high school students are saving for college, up from 51 percent in 2015.
The surge comes at a time when previous generations of college students have run up $1.3 trillion in college debt and many of them are finding their choices after graduation limited by all the bills. Those following in their footsteps have taken note.
“High school students have a heightened awareness of the high cost of a college education and its importance,” said Mary Morris, chairwoman of the foundation and CEO of Virginia 529 College Savings Plan. “Families are talking more about all these things related to financing of college, which has led to more students taking responsibility.”
Celebrezze, 18, who graduated this year from North Allegheny Senior High School, will be attending the University of Pittsburgh this fall where she plans to major in psychology. She started working part time 15 to 20 hours a week at Soergel Orchards three years ago in 10th grade.
Initially, she had no savings goals. That changed about a year after she started.
“In my junior year, (the school) started talking really deep into college planning and how expensive it is, and I started putting my money into a savings account my parents started when I was born,” Celebrezze said. “I still have money to spend. I usually take $50 out of each paycheck every week.”
According to the CSF survey, 78 percent of high school savers have put away at least $1,000, and 20 percent are saving primarily in 529 college savings plans due to the plans’ tax advantages.
The 529 program gets its name from the tax law that created it. These plans are actually college savings trusts set up under Section 529 of the Internal Revenue Code.
The College Savings Plans Network reported at the end of 2015 that families had put aside $253.2 billion in 529 plans to cover college costs.
More parents also seem to be using sound strategies to boost savings. Fiftyseven percent of students said their parents save a fixed amount per month, up from 52 percent last year, and nearly half (47 percent) said their parents started saving sometime between the student’s birth and through elementary school.
While the current generation of high school students who plan to attend college are working and saving, many of them also realize they most likely will need to tap other funding sources. The survey showed 91 percent will or may get financial aid, and 91 percent of them know that financial aid can include student loans that have to be paid back.
Morris said she believes 529 plans are doing a better job of getting the word out about the opportunities for tax-advantaged saving, but often what families have saved for college is not enough to cover all the costs.
I bought shares of True Religion Apparel at $6 a share and decided to sell if it reached $25 — which I did. It went all the way up to $36 a share, so I was mad at myself for having reaped a smaller profit than I could have. However, I can’t find it at all now, so I guess selling at $25 wasn’t such a bad thing to do.
I was a newbie investor then, and the newsletters that I read said that it’s important to establish a sell point and stick to it.
— B.B., online You can’t find True Religion in the stock listings anymore because the company was bought out by the TowerBrook Capital Partners limited partnership in 2013 for about $824 million.
Instead of kicking yourself for selling, ask yourself what your assessment of True Religion’s value was at the time. If you didn’t think the shares were overvalued at $25, when you sold them, and you believed that the company would keep growing by selling jeans for $300 and more, then hanging on would have been reasonable. If you had doubts, then selling was smart.
Don’t pick a sell price like $25 randomly. Try to have a handle on the company’s value. True Religion was actually ailing, which is why it sought a buyer.
It’s important to understand the role of your credit record and credit score in your life because a poor credit profile can cost you thousands of dollars. Lenders, insurance companies, potential landlords and others can use your credit score to determine rates they’ll charge you and/or whether they even want to do business with you. Utility companies can base the deposits they require from you on your credit score, and even potential employers may want to look at your credit report. Here’s what you need to know:
There are three main credit-reporting agencies — Equifax (equifax.com), Experian (freecreditreport. com) and TransUnion (truecredit.com). Each calculates its credit scores a little differently. Some lenders look at only one of the bureaus’ scores, some look at all of them and take the average, some look at all and take the best — and some take the worst. When you hear of your FICO score, it refers to the score developed by Fair Isaac Corp. that most lenders check. It’s available via the myFICO.com website.
One reason for big differences in credit reports and scores between agencies is that they don’t all collect the same information. Some lenders may report your credit activity to one agency, but not another. There may also be a serious error on one agency’s report, affecting its score.
Also relevant is the timing of when in the credit cycle your score is calculated. Lenders typically report the last amount you were billed as your “current balance.” If your reported credit-card balance is very low, then your “debt-to-available-credit” ratio is going to be low, too, helping your score. Large balances can depress your score.
By law, you’re entitled to a free copy of your credit report from each bureau annually. You can get them all easily via annualcreditreport.com. It’s worth checking your reports at least once a year, looking for any errors and getting them fixed. Paying bills on time and being responsible about credit will give you a better credit score, which could save you a lot of money.