Start Your Kids’ College Funds Early, and This Bank Will Give You $1,000

free money
Quinn Dombrowski under Creative Commons

If you have one or more kids, chances are you’re thinking about the cost of college — and the numbers are downright scary.

The average price of one year of college in 2013-14 ranged from $18,943 at a public, in-state school to $42,419 at a private college or university, according to statistics compiled by the College Board. And those costs are on the rise; they have increased 12% and 9% respectively in the last five years alone.

As a family, we’ve experienced this first-hand: Our daughter graduated from an in-state, public university last May, and our son started at a private university three months later. I can attest that you’re never truly prepared for the hypothetical college costs to become real ones.

In the face of these numbers, it’s easy to be discouraged, but the key is to start saving early and often — and to take advantage of every opportunity that comes your way.

Here’s one great chance to knock a bit off that tuition bill: Citizens Bank’s CollegeSaver account will give you $1,000 when you save for your child’s college fund. I only wish this is something that was available when my kids were younger!

How to get the Citizens Bank CollegeSaver Bonus

The CollegeSaver account is an interest-bearing, FDIC-insured bank account with Citizens Bank. The idea behind the account is that small, regular deposits will eventually add up to significant college savings. And to encourage those regular deposits, Citizens Bank will give you $1,000 when your child turns 18.

To qualify for the bonus you need to:

1. Open a CollegeSaver savings account before your child turns 12. While the bank itself has branches in New England, the Mid-Atlantic and the Midwest, you don’t have to live near one — you can open an account over the phone or online. You’ll need to have the child’s date of birth and social security number to open the account, as well as your own identifying information.

Each child can only have one CollegeSaver account, but anyone can open it: a parent, grandparent, aunt, uncle or even a friend who wants to contribute toward the child’s college fund.

2. Deposit a minimum monthly amount from the time you open the account until your child turns 18.

Worried about the minimum monthly amounts? Don’t be. They’re very do-able, and they vary depending on how old your child is when you open the account:

  • Less than 6 years old: You’ll need to open the account with at least $25, and then deposit at least $25 each month until your child’s 18th birthday.
  • Between 6 and 12 years old: Deposit at least $500 to open the account, then contribute at least $50 each month until your child turns 18.

On your child’s 18th birthday, you’ll see the $1,000 as well as any interest earned on the savings added to the account. The interest rate is variable and is currently .10%.

You can miss up to one monthly deposit each year and still qualify for the $1,000 bonus. To help make sure you don’t miss any payments, though, the bank recommends setting up automatic transfers from your own account into the CollegeSaver account.

How to Use the CollegeSaver Account to Help Pay for College

Obviously, $1,000 isn’t going to get you very far when it comes to paying for college, but free money is always good, especially when it’s viewed as part of a comprehensive college savings plan.

To beef up your college savings, save more than the minimum amounts in the CollegeSaver account. Citizens Bank has a College Savings Plan Calculator that can help you determine how much you’ll need.

You can also open a 529 plan, an investment vehicle designed specifically for college savings, alongside the CollegeSaver account. 529 accounts come with more investment choices and often tax breaks as well.

Finally, look for scholarships to offset the cost of college. Check out this list of over 100 college scholarships totaling $700,000 in free money. And don’t pass by the scholarships with smaller dollar amounts; those can be easier to earn, and winning a few of them can easily add up to a significant savings on your tuition bill.

By making the CollegeSaver account part of your bigger college savings plan, you’ll be well on your way to making college affordable for your child.

What if your child decides not to go to college? If you’ve met all the required monthly contributions, you’ll still get the $1,000 bonus and you can use the money however you or your child would like.

Your Turn: Are you helping your children save for college? What’s your strategy?

Julie Mayfield is a freelance writer and blogger specializing in personal finance and lifestyle topics. She is the creator of The Family CEO, a blog about money and the business of life.