Credit: Tax Credits
College expenses have increased drastically over the past few decades and only serve to increase further. It’s smart to be proactive for your child’s future so that when it’s time for them to head to college, they can afford it without stress so they can focus on what’s important: their grades. Even some of the cheapest public colleges cost a staggering $25,000 a year between the tuition, meal plans, and board. So how can you be proactive and make sure you’re ready for that day? There are two main strategies that parents undergo.
Get A 529 Plan
One Markham personal injury lawyer told us that he invested in a 529 plan through his bank. This is an investment account that can grow tax-free and an account can be started for as little as $25. This plan will give you a great tax break and is incredibly flexible. You can open one for each of your kids and even yourself if you’d like one.
A Prepaid Tuition Plan
A prepaid tuition plan is another option for parents that might fit them better than a 529 plan otherwise would. If you’re positive your child will attend an in-state public college or university then this plan allows parents to pay for tuition credits ahead of when their child will attend and this is done with a predetermined price. If your child does end up deciding that they would like to go out of state, the parents will get a refund, but they will not get the full value that the plan offers as it can save money in the long run.
Now what about mistakes that parents make when saving for their children’s college careers?
Starting Too Late
Probably the biggest mistake parents make is they are simply starting too late or do it as an after thought. College is incredibly expensive and it’s easy to rack up $60,000 in debt. There are cases every year where a student has to drop out of college after one or two semesters simply because they had no idea how expensive it actually was and the bill collectors were after them when they are only 18.
Start one of the two saving plans above as early as possible to give your kids the best chance of staying out of debt after college because nothing is worse to grade point averages than being worried about financial situations and how one is going to pay for next semesters classes.
Stopping 529 Deposits
Just because your child is now a freshman doesn’t mean you have to stop making 529 deposits. You can still deposit money into this account to help pay (or finish paying) any remaining sums of money that will come up in the next four or five years.
In today’s world college is one of the most expensive investments and we ask our kids to make them at an incredibly young age, with these saving plans we can help to secure a debt-free future for them.