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3 Worthwhile Safeguards to Include in Your College Savings Plan

Sep 30, 2018

As your child prepares to enter college or even after your child has already started classes, you understandably may be focused on maximizing the benefits of a college savings plan. Many college savings plans are heavily invested in stocks.

While the stock market historically has trended upward, there is no guarantee that the stocks that you have selected will gain at all. More than that, the market could experience a major correction at an inopportune time, and this could have a detrimental effect on your college savings account balance. There are a few important steps that you can take to safeguard your child’s education nest egg.

Use a State’s College Savings Plan


Many states now offer college savings plans, and these may provide you with reliable growth at a relatively low rate. You may even be able to enroll in another state’s college savings plan.



While the growth rate is lower than the average return on the stock market, the risk is substantially lower in most cases. If your child’s college savings is not currently in one of these plans, it makes sense to take a closer look at what they offer.

Diversify into CDs and Bonds


If you prefer to keep at least some of the child’s education savings funds out of a state’s college plan, consider investing the money in safe investment vehicles. For example, CDs and bonds generally have low rates of return compared to other investment options available.

However, these are safe investments. As you get closer to your child’s entrance into college, it makes sense to increasingly transfer funds into safer investments.

Lock in a Tuition Rate


Another excellent idea is to take advantage of tuition rate guarantees. College tuition rates and fees can increase dramatically over the years. You understandably may want the fund that you have established to pay for private MCAT tutoring, law school tuition or other post-graduate educational expenses.

By locking in a tuition rate as soon as possible, you can help to maximize the use of the funds that you have available. Paying for a child’s college education can be a stressful, challenging experience.

Regardless of the amount of funds that you have available right now, you understandably want to preserve or safely grow those funds. You also want to ensure that they are used in the most efficient manner possible. Each of these tips plays an important role in helping you to reach your goals. Consider analyzing your current diversification efforts as a starting point today.


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