A college education is one of the largest investments that one will ever make, in more ways than one. Besides the investment into the future of the student, the bill for such an education isn’t exactly cheap. As with everything in life, every little bit helps; you just need to make sure that you’re getting the most out of every dime you save to keep the benefits in your favor. So here it is: the Top 5 Tips to Start Your College Savings Plan NOW!
- Begin Saving as Early as Possible - The feds and big business offers dozens of programs for you to put some money away for your kids college education, including a Coverdell SEA (Savings Education Account). Maximum annual caps of $2,000 per account and a yearly maintenance fee make parents of future college students shy away from this tax-deferred program. However, $2,000 per year times 18 years will add up to a good chunk of change for your child.
- Look into 529 Savings Plans - These state investments, contrary to popular belief, are not regulated. The tax-deferred benefit is set to expire in 2011. Fees for such programs can run as much as 5%; but that’s all of the bad up front. The good is that your money is growing tax deferred for now at least, and they’ve had a pretty good return on investments thus far. Each state will offer different programs, so you will really need to do your homework on this one.
- State School Prepay Options - Many state colleges and universities are offering “prepay” options for parents to “lock in” the tuition prices now for when the time comes for their child to begin attending classes. This alleviates the worry of huge fee increases, for the only costs left are books. On the downside, if your child decides not to attend a state school (or no school, for that matter), you could lose at least part of the money. So be sure to read the fine print and ask lots of questions before handing over a personal check.
- Look into Tax Break Options - Tax deferred simply means that the tax monies owed are being postponed to a later date. But for many parents, an Education Savings Bond offers a full tax break. For example, a single taxpayer making less than $74,850 annually qualifies for the break. Plus, all monies are held in the parents’ name, so nothing goes against the child’s attempts for financial aid.
- Free Money with Upromise and Little Grad - Yes, free money is a good thing, and again, every little bit helps. By simply buying what you normally purchase at the grocery store among other places, the major corporations will “Thank you” for supporting them by placing money into an account for you. Upromise allows your account’s funds to be automatically sent to a 529 college fund or cashed out. For more information, visit www.upromise.com and www.littlegrads.com
