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The costs of a college education continue to rise like a hot airballoon and many fear that they will soon be beyond their reach.Some experts have estimated that the cost of an average fouryear program at a public college or university may cost as muchas $100, 000.00 in fifteen years from now. That's a lot ofmoney, regardless of your current income. The good news is that you can play now to avoid that super-hitlater on. You may not be able to control the costs of a collegeeducation, but you can find ways to lesson that blow. One way isthrough a 529 college education savings plan and even if yourchild does not decide to go to university later on you can rollit over to someone else in the family who does. A 529 plan is named after its section number in the IRS code isa savings plan for college education and when you open anaccount you have a number of options to choose from. Those options include prepaying tuition at a qualifiededucational institution at today's tuition rates or you can savemoney in a tax-deferred account that can only be used to pay foreducation at future tuition rates. 529 accounts work because either your investment earnings willgrow to meet the higher costs of future education or you willhave already prepaid for your child's college education. Mostpeople favor the savings account option because they feel thatis most attractive but it really depends on your individualfinances and your risk tolerance. A 529 plan is a state-sponsored investment program. That meansthat your state sets up the plan with an asset managementcompany and you open a 529 account with that asset managementcompany that must live with the state's desired plan features.You still own the account and you designate a child as thebeneficiary of that account. All of your dealings will bedirectly with the asset management company that has beendesignated to manage the 529 plan for your state. Depending on the state you live in there will be variances insome of the procedures that you have to follow and conditions onthe asset management companies investment strategies. Most plansare very similar but there are no restrictions on which stateyou choose to invest in so it may be worth your while to checkaround. Whatever plan or option you choose a 529 plan will help relieveyour worries about how you will ever pay for your child'scollege education |
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