Save for College Now

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Earning a college degree remains a major achievement.  The greater the level of education, the greater the likelihood of a good job and decent income.

The clock begins at birth, providing 18 years to prepare.  Yet, families just aren’t preparing.  Of those that do, most have saved less than one year’s cost of attendance.

The cost, combined with lack of savings and the resulting economic benefit, leads to burdensome debt.  That debt rests not just on the student, but on the family as well.  And, it can sit there for decades.

If you haven’t started saving at conception, the time to start is now!

How much should you save? 

Clearly, as much as you possibly can.  Some experts recommend saving one-third the expected cost, allowing the remaining portion to be paid over a lifetime of loans and future income.  This doesn’t quite make sense to us, as we know there’s a better way.

Where should you save?

Many families resort to traditional savings accounts.  While safe, though earning interest, these accounts don’t work for you.  Plus, money in a savings account will be assessed and likely reduce potential financial aid.

Other families utilize 529 plans.  While touted as savings plans, we see them as investment plans, a place where families gamble on having enough money when they need it.  Sure, they’re tax-advantaged, but they’re tied to the market, with restrictions on how the money can be invested.  You lose control of your money.  The money can be used only for qualified education expenses; if used otherwise, a penalty applies. 

Some families use Roth IRAs.  While there is tax savings, the money is also invested in market-based instruments.  Just like 529 plans, it’s a gamble you may not be able to afford.  And, there are restrictions tied to your money – contributions, access, use, etc.

Thought the above options are those most often touted by the media, Wall Street, and financial advisors, they may not be the best place to store your savings.

Contact us for guidance on where and how to save for college, so that your family qualifies for the greatest amount of financial aid possible.

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