Your child came to you one day telling you that he wants to be a doctor. You are delighted with the prospects of having a doctor in the family. However, reality sets in. If you are like most American parents, you will try to hide your worries about the cost of college education.
Fortunately, there is a 529 college savings can help to fight against the rising cost of college tuition fees.
The 529 college savings plans are available in and administered by each state. They allow an investment firm or mutual fund company to manage the accounts. Even the plans may vary from state to state, the basic function is still the same.
A national non-profit organization called The College Savings Plan Network helps families to make college education affordable regardless of their income level. You can check out their Web site to find out more details of the 529 college saving plans and make a comparison which is more suitable for your family - http://www.collegesavings.org/
One of the primary advantages of using a 529 college savings plan is that they are federally and state tax-advantaged to encourage people to save for a college education. The two basic forms of programs are college savings plan and prepaid tuition program. These two plans allow you to save money from federal income tax and possibly withdrawn as federally tax-free if used for a qualified college or university in your state.
The 529 prepaid tuition program allows parents, grandparents, and anyone else interested in helping to pay for a child’s education to lock in future tuition at the current rate. The plan may be funded in a lump-sum or in monthly installments. The 529 college savings plan is an account paid on the behalf of a child and is dependent upon the saving goals originally set. They receive a return based on a variable rate similar to a bond, but may not receive as high an interest rate.
It is never too old or young to start your child on a 529 saving account. The earlier you start to save, the less you'll have to pay out when reach a certain level. For example, if you start to save when you child is a baby, you may only have to invest $100 per month to reach the savings you want. As compared to start saving when your child just starts high school, you may have to save nearly $600 a month to reach the same level.
It is advisable and wise to plan ahead when it comes to your child's future education. By making using of 529 college savings, it help ease the rising costs of the college tuition fees. It brings a lot of benefits to the whole family, not just your child.