Are you prepared to pay for your child’s education? If not, it's time for a plan.College is a very important investment that will last a lifetime. A college education can open the door to a world of opportunity for your child or grandchild. With the cost of a college education continuing to increase, the key to affording a college education is to start saving early and regularly. Like saving for retirement, the earlier that you begin saving toward your goal, the better off you will be. Saving even a little at a time right now in a qualified 529 college savings plan can make a big difference down the road.
Education Costs on the Rise:College education expenses continue to rise every year. Currently it is estimated on a national average that a four-year degree at a public university costs approximately $72,000.00. If your child is three years old now, the price tag for their college degree is expected to be approximately $204,000.00. Moreover, costs to attend a private school are generally more than double that of a public university. Although getting some type of scholarship, grant or financial aid is possible, the bulk of a child's education expenses will fall to the parents or grandparents.
When it is time for your child or grandchild to go off in search of a higher education, how will those expenses be paid? Do you think that you will have enough money to pay for your child's education at that time or will you become straddled with extreme debt at a time that you should begin thinking about how you will save for retirement? By starting early on both fronts, you may be able to beat inflation and fund all of your future needs.
Fortunately, there are tax deferred saving plans available that help to save for the future.Tax Deferred & Tax Free 529 Plans are specifically designed for college savings, with the use of a flexible account. The account can be used to pay for qualified higher education expenses including tuition, books and other college expenses. It can be used at most accredited two and four year colleges and universities, and at many vocational-technical schools nationwide. More importantly, the funds in a qualified 529 savings investment plan grow TAX deferred and when used for education, are TAX FREE.
Why not start a bank savings account for my child’s education?If you choose to save through a regular bank account, savings bonds or other investment vehicles, the majority of the earnings on your savings will be taxed each year. A qualified 529 savings plan allows you to contribute mostly after tax dollars to an education fund that grows tax-free. If the yearly taxes on a regular savings or investment were $1000.00 per year, at the end of 15 years you would not only have lost $15,000.00, but, you would also lose the ability for that $1000.00 each year to continue to grow and gain additional interest or earnings. The compound loss versus the compound interest would far exceed the simple math of $15,000.00.