College planning is an essential part of
family financial planning. Most people understand
the importance of saving for a child's education well in
advance, however the vast majority end up saving very
little by the time the child reaches the matriculation
date. Parents will often find themselves having to
cut back on living expenses, borrow money, tap into
retirement assets, or seek additional employment to meet
the funding requirements of a college education.
What Will College Cost?
The current
cost of a four year degree from a private university is
roughly $133,000*. To send your child to a public
college to obtain a four year degree would cost
approximately $64,000*.
College saving poses another
challenge to investors. The cost of college tuition
rises at a super inflationary rate each year.
Currently, the average cost of tuition is rising annually at a rate of 7.8%*. This means that in order for
investors to stand a chance in meeting the funding
requirements, they will need to start saving early, as well
as invest in a plan that has many investment choices that
can potentially provide a higher rate of return.
Consider a College 529
Plan
College 529 plans have become an
increasingly popular way to save for a child's education.
They provide the investor with a tax-advantaged approach to
college saving and typically allow for investing in
mutual funds.
Here are some of the
advantages of investing in a college 529 plan:
Earnings
grow tax-deferred.
Withdrawals are federally tax free when used for
qualified college expenses.
There
are no income restrictions.
Contribution limits
are high.
You
retain the right to determine how the account is
used.
Proceeds can be used
nationwide.
There
are estate and gift tax benefits.
Plans
are open to residents of any state.
Initial
minimum investment is low.
Receive a Free College 529
Kit
To learn more about college 529
plans, complete this form and we will send you out a free
kit from one of our carriers.
* required field
*Source: The College Board for the 2004–2005 school year
529 Disclosure Investors should consider whether the investor's or
beneficiary's home state offers and state tax or other benefits
available only from that state's 529 Plan. Any state-based
benefit should be one of many appropriately weighted factors in
making an investment decision. The investor should consult
their financial or tax advisor before investing in any state's 529
Plan.
Investors should consider the investment objectives, risks, charges
and expenses associated with municipal fund securities before
investing. This information is found in the issuer's official
statement and should be read carefully before investing.
