Many parents would agree that next to retirement, saving for their children’s education is the biggest financial obligation they have. However, a lot of them do not know how to save money for college education, how much will it cost them and other expenses they might need to provide. The good thing for hard working students and parents today is that there are several alternative ways to save money for future college fees, especially in the past couple of years when college cost has been increasing. An example of a savings plan parents could use and afford to invest in is the 529 college plan. It is a savings plan that features very simple ways to save money coupled with a good number of benefits. A few examples of these benefits include:
● Only parents have the access and control to the savings account.
● Parents do not need to pay for the federal taxes at the time when the account starts to receive some earnings. Thus, there is a good possibility that there might be some state tax benefits, too.
● Parents can decide to roll the savings plan to another member of the family if the beneficiary does not want to pursue college education.
● Anyone in the family can contribute to the account.
● A lot of states do not require any age limit for when the money earned will be used.
● No income level requirements or limitations that might make individuals ineligible for the 529 account.
With college costs getting more and more expensive as years go by, it became tough to predict upcoming college cost after a decade. And all people could do is to anticipate for the worst, but hope for the best about college savings plan or student loan programs. On a positive note, increasing college cost will definitely compel students to study harder and to double their efforts in order to be eligible for scholarships, grants and other alternative sources for getting free college tuition fees. Indeed, this national problem requires an effort and cooperation from everyone in the country. There are ways to be able to afford college education, but only a small number of students who are fortunate enough to have access to it. It is this reason that the government encourages people to be more aggressive yet positive in looking for other ways to fund higher education expenses like through savings plan, enroll in an institution that parents could afford, student loan applications, spend a few hours for working part-time, or pursue a scholarship.
According to the Department of Education, the undergraduate tuition fees, room and lodging at a state university/college in 2010-2011 was $13,600. Parents might as well expect this cost would double in a private institution that may amount to $36,300 (non-profit) and $23,500 (for-profit institutions). On the contrary, with the help of 529 plans, parents can earn interest on their investment and it is a government-backed program. Meaning, the state government has already provided the plan holders with an asset management firm with whom parents can deal with regarding their concerns about their investment.
About the author:
Nicole McGrey is a teacher at Edinburg High School for 5 years and currently taking PHd at University of Illinois. Her writing includes few notes about Eric Schiffer. Follow her on Twitter @NicoleMcGrey