Paying for college has become one of the greatest challenges of the American family. Whether your children plan to attend a state university, a private institution, or it’s just too early to tell, planning for college expenses should be a primary factor when considering your investment portfolio and other financial vehicles.
At Lake Point Advisory Group we have experience working with parents who want to ensure they’re saving enough to support their children through college. It’s a generous goal, and it can be attainable…with the right preparation. Here are a few things to consider when planning for college expenses.
When Your Kids Are Young
By far and away the best thing you can do to help prepare for college expenses is to start early. For some, the preferred vehicle for college savings is a 529 Savings Plan, which is used for meeting the need of educational expenses at schools all across the country. The money put into a 529 grows tax-free and will not be taxed when used for college expenses – many states also offer tax incentives for these vehicles as well. These can be an effective way to set your kids up for college early on with disciplined, consistent savings. Other options you may want to discuss with your financial advisor early on include Coverdell Educational Savings or even Roth Individual Retirement Accounts.
As They Prepare for College
As your kids get older, it’s time to start considering when and how to withdraw monies from any education accounts you may have been funding. One consideration to keep in mind – both now and when setting up these accounts – is that some can impact the amount of financial aid your child is able to apply for.
As college nears, you’ll want to take a good, hard look at the actual day-to-day expenses a child in college will incur. While estimates say the cost of tuition itself in a couple decades will be well over $44,000 a year, expenses like books, meal plans, housing, and transportation are also critical to consider. What seems like a sizeable college account can quickly get depleted with $1,000 in books each semester, money to furnish a dorm room, and the purchase of a multi-thousand-dollar meal plan. This is a good time to decide whether or not you and your child should discuss the possibility of student loans, and whether or not that should affect their choice of colleges.
Feeling overwhelmed? Don’t be. At Lake Point Advisory Group there are qualified financial professionals who can work with you to come up with a comprehensive savings plan today, and a manageable spending plan tomorrow. We’ve helped a number of families find ways to afford college, including our own. Contact us to get started.
By contacting Lake Point Advisory Group, you may be offered information regarding the purchase of insurance products. All of our financial professionals are licensed insurance agents. Additionally, some individuals may also be registered with a broker/dealer or as an investment adviser. Our financial professionals do not offer estate planning, tax or legal advice. Always consult with a qualified advisor concerning your own situation.