The most frightening question to answer for any mom and dad, whose kids are about to enter college and universities in a few year\u2019s time!<\/p>\n\n\n\n
For you, I would twist the question a little bit, and ask when should you start the planning instead of how!<\/strong><\/p>\n\n\n\n You need to understand that education is investment. The earlier you plan for it, the better results will it yield in the future!<\/p>\n\n\n\n But how you want to plan for it, what options you will choose for investments are completely up to you!<\/p>\n\n\n\n I can only discuss and bring under your nose the various plans and Savings accounts you can use to grow your money to fight your child\u2019s educational costs.<\/p>\n\n\n\n But, that\u2019s not all. You have to do a bit of lifestyle change, and give your child\u2019s college costs a major priority!<\/p>\n\n\n\n This is the most vital and basic part of your planning.<\/p>\n\n\n\n You need to have a rough idea, about how much your child\u2019s future education is going to cost.<\/p>\n\n\n\n There would be market inflation, hike in education costs, change of subjects if a semester goes wrong, and many more. You need to keep in mind all the worst case scenarios!<\/p>\n\n\n\n Sit down with your kid, discuss in brief what will be his stream of education, for how long does he plan to study and is he planning to do any part time job to support his basic costs and pocket money or not!<\/p>\n\n\n\n You and the student must have a clear picture of the total cost.<\/p>\n\n\n\n Also don\u2019t forget to aim for the correct university from now itself! By doing so, you will have a more approximate cost to deal with.<\/p>\n\n\n\n You can either stash away money in a personal savings account, and let it build over the years, or you can invest in other long term strategies.<\/p>\n\n\n\n 1.The 529 plan: With the prepaid plan, you buy credits and units in a college or university, where your child shows probability of studying in the future.<\/p>\n\n\n\n The great benefit is, if you have prepaid 50% of the college costs at some university, then you will only have to pay the rest 50% even if the college costs are hiked in the future years.<\/p>\n\n\n\n With the traditional 529 Savings plan you open up a savings account to meet your child\u2019s future college costs.<\/p>\n\n\n\n This is tax advantaged, and you can withdraw money from this account, for any qualified expenses without any charge\/s applicable.<\/p>\n\n\n\n But for any non-qualified withdrawals you will be charged penaltind taxes.<\/p>\n\n\n\n So understand better, how a 529 plan performs the best.<\/p>\n\n\n\n 2.The UTMA and UGMA: Usually an adult opens up the account being the primary custodian, and when the child reaches maturity, say age 18, or age 25, which depends on the state laws, the child becomes the owner of the assets holded in the account!These custodial accounts are usually cash accounts, and securities are to be paid in full during the time of purchase.<\/p>\n\n\n\n These UGMA (Uniform Gift to Minor\u2019s Act) and UTMA (Uniform Transfer to Minor\u2019s Act), could prove to be an effective way to build savings for your child\u2019s future college costs.<\/p>\n\n\n\n You can read in full detail how UTMAs and UGMAs function and the definitions underlined under these programs in the Program Operations Manual System (POMS) article by the Social Security Administration!<\/strong><\/p>\n\n\n\n 3.The Coverdell Savings strategy: To be practical, Coverdell ESA (Education Savings Account) a great way to invest, only that the annual contributions are very limited!<\/p>\n\n\n\n The Internal Revenue Service has a good post up their sleeve to answer all your queries if you are interested in opening up a Coverdell ESA.<\/strong><\/p>\n\n\n\n 4.You can use other flexible options like opening up traditional IRA accounts <\/strong>or even purchasing a whole life insurance <\/strong>and breaking into the funds later which will be used for your child\u2019s college expenses! You have several other options to manage your child\u2019s educational expenses if you find budgeting and building savings are becoming difficult in the present times. 1.Help your child get a scholarship or grant<\/strong>. It\u2019s not that difficult. Ask him to study well, and apply for scholarships at the right time. 2.Have you thought about Europe? <\/strong>Higher studies is usually very cheap in Europe, with Germany having zero tuition fees when it comes to degrees in technical and science fields. 3.Student loans: 4.Help your kid get a part time job, <\/strong>that won\u2019t hurt his education and obtaining a college degree. So that was all. I wish your kid all the best for his future studies, and all the luck to you in providing your kid with both moral and financial support to achieve his goals!<\/p>\n","protected":false},"excerpt":{"rendered":" The most frightening question to answer for any mom and dad, whose kids are about to enter college and universities in a few year\u2019s time! For you, I would twist the question a little bit, and ask when should you start the planning instead of how! You need to understand that education is investment. The earlier… Continue reading How to plan financially for your child\u2019s college education?<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[],"_links":{"self":[{"href":"https:\/\/www.thinkfinanceinc.com\/wp-json\/wp\/v2\/posts\/533"}],"collection":[{"href":"https:\/\/www.thinkfinanceinc.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thinkfinanceinc.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thinkfinanceinc.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thinkfinanceinc.com\/wp-json\/wp\/v2\/comments?post=533"}],"version-history":[{"count":1,"href":"https:\/\/www.thinkfinanceinc.com\/wp-json\/wp\/v2\/posts\/533\/revisions"}],"predecessor-version":[{"id":543,"href":"https:\/\/www.thinkfinanceinc.com\/wp-json\/wp\/v2\/posts\/533\/revisions\/543"}],"wp:attachment":[{"href":"https:\/\/www.thinkfinanceinc.com\/wp-json\/wp\/v2\/media?parent=533"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thinkfinanceinc.com\/wp-json\/wp\/v2\/categories?post=533"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thinkfinanceinc.com\/wp-json\/wp\/v2\/tags?post=533"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
<\/strong>An effective way to build your savings to tackle future college costs.This is a tax advantaged plan and come in two forms. One plan is the Prepaid tuition plan and the other is a traditional college savings plan.Both have their own benefits and perks.<\/p>\n\n\n\n
<\/strong>These are custodial accounts, that helps transfer of funds to a child once he\/she reaches the age of maturity.<\/p>\n\n\n\n
<\/strong>This, kind of works like a 529 plan, but has an income limit, with families having an income above that limit won\u2019t be able to open up a Coverdell account!<\/p>\n\n\n\n
Many people invest in various plans rather than 529s, UTMAs or Coverdells<\/strong>, to get a good return, so surface your options very carefully.<\/p>\n\n\n\n
Surely, with a limited income and a thin room for savings, opening up a 529 plan or UTMA might get expensive.
So here are your various ways to cope up with education costs:<\/p>\n\n\n\n
All the details about scholarships <\/a>are provided by the Federal Student Aid for your help.<\/p>\n\n\n\n
The number of US students going to Europe for higher studies is also significantly increasing.<\/p>\n\n\n\n
<\/strong>This should be your last option.
If you are already suffering from huge debts, then be sure to clear them, before you apply for student loans.
It is always advised to apply for student loans with no other financial liabilities around. <\/strong>
Therefore, it\u2019s better you find out the best ways to consolidate debt <\/strong><\/a>fast!
If you take out a student loan on top of other existing debts, then trust me, that\u2019s the biggest mistake you will make.
The present scenario of student loan debt is very bad, with the amount crossing more than $1.4 trillion in total in our country.
So make sure getting student loans should not get you behind bars financially!<\/p>\n\n\n\n
This would make your child smart and will also support the college costs a lot!<\/p>\n\n\n\n