As all college students know, the cost for higher education can be steep, but if you plan for your child’s education while their young you will have more than enough assets to fund college for your kids. According to the Princeton Review the average cost for a public or state school in 2004 was $ 8, 470, while private schools are much higher at $ 22,541 and both are scheduled to rise by an average of 5 percent a year.
Both experts and parents agree that the need to save is urgent, “I know that I have to starting saving now for the future so my son can have the best education possible” said Adrian Bell, a senior nursing major from Alexandria. Many young parents do not know all the options in long-term savings. “I know some of the usual ideas for saving for my daughter’s education like bonds,” said Ty Roberson, a senior from Shreveport.
Created in 1990 by the Treasury Department the Education Bond Program allows interest to be completely or partially excluded from federal income tax when the bond qualified as a higher education expense. Both Series EE and Series I are eligible for the tax credit, but can only be purchased by someone 24 years old and you are only permitted to buy $30,000 in face value a year.
Bonds and custodial accounts, that allow you to save on the tax by being charged the child’s rate which is usually lower than your are some of the ways that people are familiar with. Programs like the 529 college saving, which is named for its Internal Revenue Service code are sponsored by states in an effort to help save for the child’s education. 529 programs recognized the need for families to set aside significant assets for college by offering tax-deferred accumulation and favorable treatment when money is removed from the account.
Another option that guarantees 4 percent interest return this year are Universal Life insurance which are long-term bonds the grow slow over time unlike Variable insurance which grows much faster but does not have a guaranteed return rate since savings are based on stock market investments.
If you start early in the child’s life by the time they leave for school they should be well funded for the entire price of higher education. ” Now that I know all the costs, associated with school, I will make sure that my child has enough money saved to cover everything.” Said Sam Touch, a new father and recent graduate from a private school. For more information on the 529 program you can visit www.theeducationplan.com and to find out about Universal and Variable Life Insurance you can check with your local insurance agent.
