| Kids in College Can Be a PLUS
– Parents, Know your Education Funding
Options
When you are sending your child to college,
there are several different things to be looked
into. One of the first considerations will
be finding the right school for your child
to attend. Beyond this are also financial
considerations for a student. The financial
aspect of college will often times cause a
child to rely on parents to help with funding
options that are available. Because of this,
there are several programs and funding options
to send your kid to school in which you and
the child can benefit from the investment.
One way to help with finances for sending
your child to college is through a savings
that you start early on. This can have many
benefits to it later on. One of these is the
Education IRA or the Coverdell Education Savings
Accounts. By saving in this account, you will
be able to have tax free costs, as long as
the money is used for your child’s education.
There is a limit to putting $2,000 in this
account per year. Not only will this count
towards your taxes, but it will also help
with credit and investment reports if needed.
Another is the Roth IRA Account. You can put
up to $4,000 in the account every year, allowing
accumulation potential. This is similar to
the Coverdell Education Savings Account, but
allows more flexibility in the amount of money
you can save.
Another way to help is by becoming involved
in the 529 Qualified Tuition Savings Plans.
With this, you can contribute any amount that
you like, and receive benefits with taxes.
The savings, when used, will count as a gift
tax treatment, which will lower your taxes
considerably when factored in. These don’t
have limits on the amount of money you put
in, they can be started and given to any state,
and you keep control of the money. Some disadvantages
to this are that the plan is not guaranteed,
so you may loose principal if finance charges
change by the time your child goes to school.
There is also the problem if there is a withdrawal
from your child from school or if they receive
a scholarship the money will have no use.
If you decide to use the 529 plan, you will
also most likely be using a broker to help
with the money benefits and limitations.
Another way to help your child with finances
and receive benefits at the same time is through
the stock market. This way, you can minimize
effects of capital gains taxes. You can give
your child enough money to pay for their tuition
through stock. When your child sells the stock,
you can receive a lower tax rate off that
stock. The best type of stock to invest in
will consist of a mix of stocks, have reinvestment
plans, receive mutual funds, and are best
started when the child is young.
A third way to have money for your child’s
education is through family scholarships.
Through different types of scholarships, you
can receive a given amount of tax credit for
the family. Along this line, there are also
several loans available from financial aid.
This is one way to help with your child’s
education, your credit, as well as making
another investment that can cut off on taxes.
Depending on the school, there may also be
aid available through grants or scholarships
for the family while the child receives their
education.
One thing that most say is if you decide
to invest in a child’s fund, it is also
important to continue to invest in your own
retirement accounts and other things. There
are options to loan from yourself in another
account if you need more money. This will
also help in case your child decides not to
go to school right away. Your entire investment
will not be in one area.
There are several options to help fund your
child’s school. The main key is to begin
investing early and to look into all of the
different ways that will benefit both you
and your child. By knowing what will best
fit you, you will be able to have taxes reduced,
build credit and invest in something that
will help your child for a lifetime.
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