How To Save For Child’s College
When it comes to college savings, there’s no shortage of confusion….
What will college cost when they get there?
How much debt will they/you need to take on?
What is the best way to save for their college?
When is the best time to start saving for college?
It’s great that you’re here right now, because that means that you’re thinking about your child’s college education, and ready to find the best ways to save for it.
First up, you need to pick the right savings vehicle. Picking the wrong one could mean that your child misses out on financial aid opportunities, or costs them tons in taxes that could have been avoided.
Financial Aid is usually determined from the parent’s and student’s income and assets during the student’s Junior year of high school, but the student’s income and assets carry greater weight than their parent’s, so when at all possible, it’s usually more advantageous to keep college savings in the parents names (using tax-advantaged savings accounts) to avoid missing out on financial aid.
But the flip side of choosing a college savings vehicle is that you can use one to your and your child’s advantage to make their college experience a less painful, and hopefully debt-free one.
There are 5 main savings vehicles for college:
- 529 Plans
- Prepaid Tuition Plan
- UTMA & UGMA Accounts
- Roth IRA
- Coverdell Education Savings Account