College Planning:College Planning:Easing the Easing the Financial BurdenFinancial Burden

Advice from CPAsAdvice from CPAs

Easing the Financial BurdenEasing the Financial Burden

•How you’re going to pay for children’s college

education?

–The numbers can be overwhelming

–It won’t be easy

–It will take planning, research and belt tightening

–It might even take debt

Easing the Financial BurdenEasing the Financial Burden

•Funds for paying for a child’s college education will usually comprise three sources:

–Savings–Financial aid –Tax relief

•You should not save for college at the expense of your own retirement savings

Easing the Financial BurdenEasing the Financial Burden

•It pays to start early

•Take advantage of the power of compounding

–The earlier you start the more interest

you will earn and the more you will save

Easing the Financial BurdenEasing the Financial Burden

•Consider how to allocate your assets

–Stock Market

–Short-term bond funds

–Money Market fund

•You want to know the money is available

when you need it

Easing the Financial BurdenEasing the Financial Burden

•Valuable tax breaks to consider

while saving for college:

–529 Savings Plan/Qualified Tuition Program

–Prepaid Tuition Plan

–Coverdell Education Savings Account

–Uniform Gift to Minors Act

–Savings Bonds

Easing the Financial BurdenEasing the Financial Burden

•State-sponsored 529 Savings Plan,

also known as a Qualified Tuition Program–Earnings and distributions are tax free–No income limits on contributions–Investment minimums are low–One child can be beneficiary of more

than one account–Assets managed by a professional financial

services firm

Easing the Financial BurdenEasing the Financial Burden

•Prepaid Tuition Plan

–Pay future tuition at a state college

at today’s lower rates

Easing the Financial BurdenEasing the Financial Burden

•Coverdell Education Savings Account

–Save for college the same way to save

for your retirement

Easing the Financial BurdenEasing the Financial Burden

•Uniform Gift to Minors Act•Unlimited investment options

–Parental control over assets–May be subject to “kiddie tax”

•Savings Bonds–Series EE and I bonds

Easing the Financial BurdenEasing the Financial Burden

•Nest Egg Falling Short?

–Use of financial aid

–Loans

–Tax credits and deductions

Easing the Financial BurdenEasing the Financial Burden

•A few more options…

–Advanced Placement classes

–Community College

–Postpone for a year

–Volunteer

Easing the Financial BurdenEasing the Financial Burden

•Useful Tips…

–Involve your child in the financial

planning process

–Encourage frugality

–Begin saving as soon as possible

–Encourage your child to be an achiever

–Make a joint effort