Key Points to Consider When Saving for College

Late this past summer, earlier this fall, millions of students made it back to their college or university of choice; others made it, but maybe not to the school of their choice.  Millions of parents hope their younger children might one day do the same.

Most, if not all of those families, might be thinking about how to save for that expense.  Others may not yet have begun saving.  And, yet others, perhaps most, feel hopeless. 

They have debt – mortgages, credit cards, auto loans, medical bills, maybe even their own student loans – but have no hope they can one day be free from debt and able to help their children cover the expense of an undergraduate education.

As with much of life, it’s never too late to begin saving. 

The favored saving vehicle of the day is now, and has been for some time, the 529 Plan.  It is the vehicle of choice, providing the best odds of having the money when needed.

Sure, it’s an immensely popular plan.  Why wouldn’t it be?  Everyone writes about them, the media pushes them.  It must be the right vehicle to use!

But, is it really a savings plan???

After all, the investments (?) in these plans are tied to your risk tolerance – low, moderate, high.  If it’s really a savings plan, why is risk attached to it?  If there’s risk, isn’t it possible you’ll have lees when needed then the amount you invested?

Sure, there’s tax-free growth and tax-free withdrawals (when the money is used for qualified education expenses).  And, then there’s the published disadvantages – limited investment (there’s that word again!) options and a 10% tax penalty if the money is used for non-qualified purposes.

Basically, you lose most control over the money when you contribute to 529 Plans and you subject it to market forces (i.e., possible loss). 

Why utilize 529 Plans when there is a better option, an option they do not promote.  It’s not a Roth IRA, as once again you lose control of the money and subject it to risk of loss.

Contact us about a properly designed and implemented college planning campaign.  We’ll show you the best options for the money you were going to invest in a 529 Plan.

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