Traditional school is ready to begin a new year and you can plan for college expenses now. Parents have been shopping for clothes and supplies and students are enjoying the last days of summer vacation. Now is a good time to plan for savings for college for children and grandchildren.
According to U.S. News, the average cost of tuition and fees continues to increase. In the 2018–2019 school year private college costs are $35,676. During this same period, public colleges for state residents average $9,716. Out of state students will pay $21,629. Community colleges and trade school costs are also higher.
This is a good time to consider how to fund college for your family. There are a few different ways to save for college. One of the best is the 529 plan.
Established in 1996 under the Small Business Job Protection Act, this plan allows savings for college with a tax advantage. Using this plan families can save for future educational expenses. You are allowed up to $15,000 per beneficiary. Be aware this includes other gifts to the future student as well. Amounts larger are taxable.
You can use one of two types of plans. Prepaid tuition plans for participating colleges and universities can be applied to future tuition and mandatory fees. These may apply at their current price for the future student. You cannot use these for room and board or for elementary or secondary schools. In addition, you must also be aware of other restrictions. Educational savings plans provide an opportunity to open an investment account to save for future educational needs. You can withdraw from this account to use at most colleges and universities as well as elementary and secondary institutions.
What are you doing today to prepare for your family’s educational future? This is one of the areas where a Certified Financial Planner (CFP) can help. This type of savings should be part of your overall fiscal plan.
As you complete those back to school shopping trips for youngsters, it might also be a good time to review your plans for financing their education. Beginning early can prepare for college, universities or other educational expenses in the future. Investments in your children’s education can be one of the best return on investments that you can make for them.
Les Merritt has helped many families with their planning for decades. He is available to help you and your relatives as well. Contact Les and his staff at (919) 269-8553 to set an appointment to plan for college expenses now.