Education Planning

What is the best way to pay for college?

College costs cannot be underestimated as more and more graduates are struggling to pay off their student debt. Education planning will help ensure that your children or grandchildren will have the funds available to pay for higher education expenses.

There are several options when considering an education plan, including 529 Plans, Coverdell Education Savings Account, and gifting. At SFP, we can help you sort out which option works best for your family. 

There are many factors to consider when selecting a college savings plan. As with any savings goal, individual factors such as time horizon, risk tolerance, investment preferences, and tax situation need to be considered and weighed to select the most suitable savings plan.  Also, special consideration needs to be given to who will own the college funds as the decision is likely to impact the availability of financial aid in the future.

There are a plethora of options available to save for your loved ones’ education. We can help you explore the following options:

  • Traditional Savings Methods: Accumulating college funds such as savings accounts (CDs, money market funds), tax-free municipal bonds, U.S. Treasury securities, or mutual funds;
  • Tax-Advantaged Methods: an incentive for families to start early with their college savings plans, the federal tax laws provide for tax-advantaged methods to pay for college expenses. We can point you in the right direction;
  • IRS Sec. 529 Qualified Tuition Plans: There are two main types of 529 Plans − a pre-paid tuition plan, and a college savings plan. It is essential to carefully consider how to invest in a 529 Plan since it can impact a student’s eligibility to participate in need-based financial aid programs;
  • Coverdell Education Savings Plans: Enable college savers to contribute up to $2000 per year on a tax-deductible basis;
  • U.S. Savings Bonds: We can help you navigate the complexities that go along with interest earned from these investments; 
  • Financial Aid: Special consideration should be given to future eligibility for financial aid – especially if assets are held in the child’s name or a trust for the child. We can help you make sense of these complexities.

Working together, we can examine college investment options to build a customized portfolio that takes into consideration your financial goals, risk tolerance, and timeline. Contact us today to find out more.