college planning: easing the financial burden
Post on 24-Feb-2016
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College Planning:Easing the Financial Burden
Advice from CPAs
Easing the Financial Burden
• How you’re going to pay for children’s college education?
– The numbers can be overwhelming– It won’t be easy – It will take planning, research and belt tightening– It might even take debt
Easing the Financial Burden
• Funds for paying for a child’s college education will usually comprise three sources:
– Savings– Financial aid – Tax relief
• You should not save for college at the expense of your own retirement savings
Easing the Financial Burden
• It pays to start early
• Take advantage of the power of compounding– The earlier you start the more interest
you will earn and the more you will save
Easing the Financial Burden
• Consider how to allocate your assets– Stock Market– Short-term bond funds– Money Market fund
• You want to know the money is available when you need it
Easing the Financial Burden
• Valuable tax breaks to consider while saving for college:
– 529 Savings Plan/Qualified Tuition Program– Prepaid Tuition Plan– Coverdell Education Savings Account– Uniform Gift to Minors Act– Savings Bonds
Easing the Financial Burden
• State-sponsored 529 Savings Plan, also known as a Qualified Tuition Program
– Earnings and distributions are tax free– No income limits on contributions– Investment minimums are low– One child can be beneficiary of more
than one account– Assets managed by a professional financial
services firm
Easing the Financial Burden
• Prepaid Tuition Plan– Pay future tuition at a state college
at today’s lower rates
Easing the Financial Burden
• Coverdell Education Savings Account– Save for college the same way to save
for your retirement
Easing the Financial Burden
• Uniform Gift to Minors Act• Unlimited investment options
– Parental control over assets– May be subject to “kiddie tax”
• Savings Bonds– Series EE and I bonds
Easing the Financial Burden
• Nest Egg Falling Short?– Use of financial aid– Loans– Tax credits and deductions
Easing the Financial Burden
• A few more options…– Advanced Placement classes– Community College– Postpone for a year– Volunteer
Easing the Financial Burden
• Useful Tips…– Involve your child in the financial
planning process– Encourage frugality– Begin saving as soon as possible– Encourage your child to be an achiever– Make a joint effort
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