GUEST POST-
Saving for Your Child's College? Consider a 529
Savings Plan
Ask any current or soon-to-be parent and they will
likely tell you that among the myriad of things they worry about, paying for
their child's college is pretty high on the list. With tuition and fees
increasing by the day, there's no telling what college rates will be ten or
twenty years from now.
Being such a prevalent, real problem, it's no wonder
that several methods and plans for savings seem to be popping up left and right
these days. One of these methods is the 529
Plan—an education savings plan operated by a state or educational
institution.
A little over a decade old, these types of savings
funds were created in 1996 by the Internal Revenue
Service. Offered in nearly every
state in the U.S., the plan provides a full, detailed list of
participating areas for people to check before they get their mind set on
investing. Different states have different types of plans, so it's important
for parents to do their research before choosing one. Also, only certain
schools and educational institutes participate in the 529 funds program, so
it's important for parents to keep that in mind, as they make their decision.
Plans can either be classified as
"savings" or "prepaid." A 529 SAVINGS plan works like a
401k or other long-term investments in that you, the parent, make investments
with your contributions. The fund then fluctuates based on the performance of
those investments.
A PREPAID 529 plan, on the other hand, lets you
pre-pay all or part of the costs of an in-state public college education. These
also offer a bit more flexibility as it has the ability to be converted for use
at both private or out-of-state colleges; however, there is a separate private
college plan for those interested.
Overall, regardless of type, these plans are a great
option because they allow parents to essentially "set it and forget
it." With the option to implement automatic savings or investing
decisions, parents can make a decision once and then let the plan run itself.
This helps it stay out of sight and out of mind until it's needed, which
increases the likelihood that that money will still be there, ready and
waiting, for when your little one ships off to school.
Some of you might think it's a bit too soon to be
thinking about this, but when it comes to your child's future, you can never be prepared enough, so might as well get a
jump start, right?
Maria Rainier is a freelance blogger and writer for onlinedegrees.org. Maria believes that
online degrees and online universities are the future of higher learning. She
is interested in all things concerned with higher education and is particularly
passionate about life after college. Please share your comments with her.
Thank you for such wonderful and helpful information.
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