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SAVING FOR COLLEGE

When your child is ready for college,
it would be nice if you were, too.

College is expensive. And the price is only going up. But there are many ways to prepare for the expense of tuition — even plans which allow tax-free growth as long as the money is used for qualified education expenses.

It's not just parents who can contribute to college savings plans. Grandparents, aunts, uncles or any interested party may invest in one (or more) of the following:

  • 529 plans
  • Prepaid tuition plans
  • Coverdell education savings plans
  • UGMA/UTMAs

Prime Earners

If your kids are ready for college and you're not, start looking for financial aid. There are more sources than FAFSA and Pell Grants. Seek them out.

Empty-nesters

Still paying student loans? There's a tax break* you may be due. For 2010, interest up to $2,500 per year is deductible with income up to $145,000 when married and filing jointly.

Retirees

Contributing to grandchildren's 529 plans may be a great way to transfer assets tax-free. For 2010, you may contribute $13,000/yr or one $65,000 lump sum every five years.


*AARP Financial Inc. does not provide tax advice. Please consult a tax advisor for information pertaining to your particular situation.

**An Automatic Investment Plan does not assure a profit and does not protect against a loss in a declining market.

 

"A college degree is not a sign that one is a finished product but an indication a person is prepared for life."

– Reverend Edward A. Malloy


 

The information and content provided herein is general in nature and is for informational purposes only. It is not intended, and should not be construed, as a specific recommendation, or legal, tax or investment advice, or a legal opinion. Individuals should contact their own professional tax or investment advisors or other professionals to help answer questions about specific situations or needs prior to taking any action plan based on this information.

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