When looking to choose the best college savings account, there are plenty of options to consider. However, this doesn’t mean that funding a college saving account is an easy job. It takes time, commitment and effort to keep your account in good shape.
Here are five popular are tested ways to build your college savings account.
1. Choose 529 Plans
Undeniably, this is one of the best ways to save for your child’s college tuition. Thanks to a 529 College Savings Plan, parents are able to save for their boy or girl’s education with pre-tax dollars.
Funds are invested in various ways which also include age-based packages that take on higher risks when your child is young but shifts funds to safer investments one your little one is all set for college.
Since it works much like the Target Date Retirement funds, chances are you are already familiar with the concept in your 401(k) plan.
Every penny deposited into a 529 is pre-tax. The funds grow tax-free. The best part is that you will never have to pay taxes on any of the funds or their growth if you use them for funding your child’s college education. Since all funds in the 529 belong to the parent, you can use the money for funding any of your child’s education.
2. Federal Financial Aid
This aid is one of the most popular forms of financial assistance available to students. The eligibility is be determined by the information submitted on the Free Application for Federal Student Aid (FAFSA). Although, there are both lifetime and yearly limits to this type of aid, it still offers an incredible way to minimize the cost of college.
3. Prepaid Tuition Plans
Conventionally used at a state university close to the student’s home, parents can lock in tuition prices by paying the fee in advance. This technique offers a great protection against staggering rises in the price of tuition, even when a baby is years away from college.
However, not every state provides such plan. However, it’s definitely worth a thought.
4. Coverdell Education Savings Accounts
These accounts cover pre-college and college expenses. It is common for parents to choose these savings accounts for both purposes.
Parents generally establish tax-advantaged with the students as beneficiaries.
The internet has transformed the world into a social community. Many crowd-funding websites can invite your loved ones to help you save for your child’s college fee. One such platform is The Gift of Education, which allows your friends and family to help you save enough funds for your little one’s future. Thanks to an easy setup, you can create an account in no time to start saving every penny for your child’s college education.
Some people like to invest in bonds, stocks and securities to secure the future of their children. Pre-paid programs serve like pensions and grow at a rate guaranteed by the sponsor. However, these are usually limited to schools or state residents. Make sure you choose the best way to save up for your child’s college education.