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Financing your college expenses with Section 529 Plans
by My college Corner My College Corner provides webinarsDerived
from the statistics provided by the U.S. Department of Education, the average
total cost of college ranges between $60,000 and $131,000, and with tuition
fees only expected to rise, planning for these expenses is more critical than
ever. Of course, as with any long-term savings plan, the most viable strategy
is to start planning early. Parents and students should review all of the college
payment plans available as part of the planning process.
On
the top of the list should be Section 529 plans. Section 529 Plans are largely
divided into two categories: prepaid tuition plans and college savings plans.
Generally, prepaid tuition plans allow parents to settle future college
expenses at today's rates. The advantage of a prepaid plan is that parents are
certain that a child's college costs will be entirely covered. Not to mention
if their child chooses not to enroll at the college, parents can get a complete
refund. When opting for a prepaid plan, however, parents should be mindful of
the fact that "today's rates” also cover a suggested rise in tuition fees,
leading to amounts that may be higher than the current tuition costs.
As
a substitute, parents can also consider college savings plans, which add a
degree of flexibility and control. These plans enable parents to contribute to
an investment account, in which assets grow tax-free, for the purpose of
settling up with the beneficiary's college costs– inclusive of what is
the tuition fee, cost of books, supplies, room, and board, to name a
few. When opting for a college savings plan, parents should account for the
incidental costs and the investment alternatives at their disposal, and
ascertain whether the plan fits their financial goals. Since the costs are
deducted from investment returns, it is crucial to keep these costs down. The
plan should also hold out flexible mutual fund investment options that will
allow the account owner to broadly branch out across asset classes and
geographical locations.
If
these savings aren't enough by the time the first college bill comes due,
students should consider applying for different grants and scholarships. Applying
for student loans should be the last choice if there is still a deficit. While
it is optimal for college expenses to be covered completely by savings, and not
financed by debt, parents and students may find that the best plan for them is
a combination of these plans.
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About My college Corner 
My College Corner provides webinars
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Created on Aug 7th 2018 06:02. Viewed 243 times.
