HARRISBURG — As part of America Saves Week, Feb. 24-29, the Pennsylvania Higher Education Assistance Agency (PHEAA) is joining thousands of like-minded organizations to encourage people to adopt an automatic savings strategy.
Saving automatically is the easiest and most effective way to save. Whether saving for an emergency fund, college costs, or retirement, an automatic savings plan continues to be the best possible way to reach any savings goal.
“Forty percent of Americans have less than $400 in savings that can be used in the event of an unexpected emergency — let alone to help them pay for college,” said Rep. Mike Peifer, PHEAA board chairman. “It’s not enough to simply set a savings goal. Families must also have a manageable plan in place to be successful.”
Successful strategies for savings include:
• Save automatically. Automatic savings means having a process in place to save at regular intervals, whether that’s monthly, weekly, or daily. It puts extra cash out of sight and out of mind.
• Pay bills with auto-pay. This ensures bills are paid in full and on time to avoid late charges. As a bonus, some loan providers offer an interest rate deduction for enrolling in auto-pay.
• Save financial windfalls and tax refunds. For every financial windfall, such as a work bonus, inheritance, contest winnings or tax refund, put a portion into a savings account.
• Pay off credit cards each month. Earned miles and cash-back are only valuable for someone who is not falling into debt or paying too much interest.
• It’s never too soon to start saving for college. Set aside money on a regular basis specifically to be used for future college expenses. Instead of birthday gifts, consider asking for donations to a college fund for children who already have enough clothes, toys, etc.
“Every dollar that you save today will be a dollar less that you’ll need to borrow later to pay for college,” said Sen. Wayne Fontana, PHEAA Board Vice Chairman. “Even saving a small amount, especially when done automatically every month, can help students and families avoid the high levels of debt that many of today’s graduates are struggling to manage.”
Pennsylvania’s 529 Plan is another excellent way to save for college as it offers both tax advantages and future financial benefits. Not only are contributions deductible from state income tax, but the assets held in the plan are not counted when determining eligibility for state financial aid for college. For more information on the PA 529 Plan, which is administered by the Pennsylvania Treasury, visit PA529.com.
Leveraging the long-term benefits of Pennsylvania’s 529 Plan, Treasury’s new Keystone Scholars Program invests $100 for every baby born to or adopted by a Pennsylvania family to be used for the baby’s future higher education expenses. New and expectant parents will be able to register for online access approximately 5 months after the child’s birth using information from the child’s Pennsylvania birth certificate.
By accessing their Keystone Scholars online account, families can track the growth of their funds and to link a PA 529 account through a single portal. For more information on the Keystone Scholars Program, visit PA529/Keystone.
For more information, visit PHEAA on social media. Additionally, video tutorials explaining the student aid process and types of aid available can be found at YouTube.com/PHEAAstudentAid.
