Plan helps pay for child’s education
By Nechama Katan
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Paying for children’s education expenses is a major concern for many parents. In the Jewish community this often starts well before college with private religious schools and afterschool programs. Planning can be so overwhelming that it is simply ignored. Regardless of the age of your child, proper planning will help make this dream a reality. Here are a few things to focus your efforts.
Start Now! The earlier you start the longer you have for your money to grow. Invest that baby money in a college fund. If this is a not a first child and/or you already have other baby items, consider having relatives who want to give you a gift start a college fund. If you have teenagers but have not started saving, now is still a good time to get started.
Be Tax Savvy. There are a number of tax advantages accounts available for college funding: 529 savings accounts and Coverdell Education Savings Account. Generally they are funded with post-tax dollars, but you don’t pay taxes on the growth of the account as long as they are used for education. They have different requirements and restrictions. Education Savings Accounts can be used to fund some K-12 education expenses.
Know what you will have to pay. Parents can use an online Expected Family Contribution Calculator (www.finaid.org) to estimate expected family contributions. There are no guarantees and it is more accurate the closer you are to needing to fund college expenses. Private and public colleges often post their tuition and fees on their Web pages. Use this information to understand how much you will need to save.
Loans. For many families student loans will pay for part of the college expenses. It is important for the student to understand what the monthly payments for those loans will be. Once they have graduated from college they will need to make sure that they are positioned to find a job that will support the loan payments.
Get a Plan. Education funding requires planning to make sure that you have a strategy that works for your family both short- and long-term. Work with a professional financial advisor to make sure that your education needs are captured in a comprehensive financial plan. Remember there are student loans for college but no student loans for retirement.
This article is for informational purposes only and should not be construed as investment or financial advice related to your personal situation. Consult your financial advisors prior to making financial decisions. For more information, you may contact the writer Nechama Katan at: Waddell & Reed, 8625 SW Cascade Ave. Suite 410, Beaverton, OR 97008, 503-627-0740 or nkatan@wradvisors.com.
