COURIER LIFE, JAN. 31-FEB. 6, 2020 43
Education
College is the next logical
step for many newly
minted high school graduates.
The National Center for
Education Statistics indicated
that, in fall 2019, roughly 19.9
million students were slated
to attend colleges and universities
in the United States. Statistics
Canada stated that, for the
2015-16 school year, the most
recent for school statistics, just
over two million students were
enrolled in Canadian universities
and colleges.
Families need to begin
thinking about how to pay for
college as early as possible. According
to the Wall Street Journal,
the average college graduate’s
student loan debt is $37,172.
And the most recent data from
the Federal Reserve Bank of
New York indicates the overall
student loan debt in America
alone is roughly $1.3 trillion.
The average expense of sending
a child to college has been
rising at double the rate of infl ation
for more than a decade, offers
CNBC.
A robust college savings account
can help future students
avoid considerable debt. The
following are some ways to save
for college.
• Open a tax-advantaged 529
college savings plan. The U.S.
Securities and Exchange Commission
says a 529 is a savings
plan designed to encourage saving
for future education costs.
The person funding the account
pays taxes on the money before
it’s contributed to the 529 plan.
Funds can be used for education
expenses. There are two
types of 529 plans: prepaid tuition
plans and education savings
plans. The prepaid plans
allow account holders to purchase
units or credits at participating
colleges and universities.
With education savings
plans, account holders open investment
accounts to save for
qualifi ed future higher education
expenses, including room
and board.
• Invest in a Coverdell Education
Savings Account. A Coverdell
account is a tax-advantaged
method to contribute up
to $2,000 per year to a child’s
account. Individuals need to be
under a certain income level to
contribute. The funds will grow
free of federal taxes.
• Consider a Uniform Transfer/
Gift to Minors account.
This is a custodial account
that holds and protects assets
for benefi ciaries, who are typically
donors’ children. The
custodian controls the assets
until the minor reaches legal
age. The money will not grow
tax-free, and it can be used for
purposes other than school expenses.
The account also may
count against the student and
parent when applying for fi nancial
aid, which is something to
keep in mind.
• Open an IRA. IRAs are
often associated strictly with
retirement savings. However,
they also can be used for qualifi
ed college payments as long
as the contributions have
been made for at least fi ve
years, advises Nationwide Insurance.
• Use a standard savings account.
Even though it may not
grow as quickly as investment
accounts, routinely saving
money in a savings account can
be another means to saving for
college.
Starting early can give
families ample time to save
substantial amounts of money
for youngsters’ college educations.
The best ways to
build a college fund
Call 718-368-5050 for more information!
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