In 2002, the average annual cost for a public university was
$9,338. It is estimated that by 2017, the average annual cost
will be $19,413. And that's just for tuition and credit fees.
Let's not forget about room and board, books, food, clothes and
extra activities.
With those figures it mind, it would be wise to start planning
for your child's education today.
You already know about loans and scholarships but those aren't
the only options. You don't have to go into debt! There are
several choices to help you prepare for your child's future.
529 Plans
A 529 or qualified tuition program is a (federal) tax-free
investment plan that allows families to save for their childrens
college educations.
Each state has its own 529 plan and you do not have to be a
resident of a particular state to invest in that state's plan.
The 2 types of plans include:
Prepaid Tuition Plans - These plans allow you to pay for your
child's in-state tuition at today's prices. These accounts are
low-risk and they are guaranteed to match or exceed in-state
inflation. However, these plans are often limited to state
residents and the cost may not be covered if your child decides
to attend an in-state private university.
Education Savings Accounts- Or college savings plans are
investment accounts whose value fluctuates with the market. They
can be used at eligible public and private universities- there
are no residency requirements. Additionally, some plans have
high contribution limits per beneficiary and you can contribute
up to $11,000 per year without paying a gift tax.
Savings Accounts
Even if your child only has a few years until it's time to go to
college, it's never too late to begin saving. Determine where
you can cut costs and put that money into a high-interest
savings account.
For example, instead of buying 2 video games as a birthday
present, buy one and put the extra money into a savings account.
What about Christmas and Hanukkah? Sure, it's fun to open
presents but I guarantee that the novelty of those gifts will
soon be forgotten and later on your child will thank you for
making sure that their education was financed in a stress-free
way.
Here is a tip: look for a FDIC insured bank that is based
online. These banks offer higher interest rates because they
don't have the operating overhead of having branches. The work
the same way as a regular bank except that there is no physical
branch. You deposit money through your current checking account
and receive monthly statements either via email or through the
mail.
About the author:
DJ Nelson wants to help you jumpstart your child's future. Open
a savings account today. Visit
http://www.KidsSavingsAccounts.com to open a high-interest, no-
minimum savings account in under 5 minutes.
Written by: DJ Nelson
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