|How to be Prepared to Pay for a College Education|
|Written by ken halpern|
The goal of every parent or guardian or grandparent is to see that child succeed. Success in life is often seen starting with that sign of achievement of a college degree. As college costs rise, it may make it more difficult for young adults to afford college. It will take planning to that to cover the cost of that education. Here are some pointers to help reach the goal.
Step 1: Investigate whether your state has a program that allows you to lock in the ‘tuition costs’ for college at a state school so that regardless of how high tuition costs become it guarantees that your child will be able to attend. Don’t worry about whether your college student of the future may not want to attend a state school, if they don’t the money is still there to be used at the college of their choice, but it may not cover as much of the expenses. Programs differ, but the goal is the same – locking in future costs, with a commitment of monthly payments now.
Step 2: Look into setting up a Coverdell Education Savings Account. Contributions can be made to this type of account up to $2,000 annually. Money put into these accounts are not tax deductible, but the revenue does grow tax free, until it is distributed for use. The beneficiary will not owe tax on the disbursements providing that the disbursements are less than the total expenses at the qualified institution.
Step 3: Discuss with your financial planner whether setting up a Uniform Gifts to Minors Act Account is practical. Money given to a minor can be placed in this account for use later. It can be a way for grandparents to help with the future expenses of college. Consult a financial planner you trust on this. If this is set up make sure everyone who would want to help by giving gifts ‘earmarked’ for this fund know about it.
Step 4: Buy US Savings Bonds. If you are unsure of to give that new born baby, or young child consider buying US Savings Bonds. The redemption value is the face value, while the purchaser pays less. Tax is paid on the bond at the time of redemption by the person redeeming it. They may not be glamorous, but they will be practical some time in the future. They are very easy to purchase and later redeem at any bank.
Step 5: Seek out scholarships from the school as well as Federal and private grants.
Step 6: Research student loans. Student loans have to be paid back. The more money you can have available that does not require repayment, means the less likely a default will occur. A college education does not guarantee financial security, but it does give someone the best chance of getting a successful career off the ground.