If your child has graduated high school or is about to and you realize you don’t have enough saved for his college education, don’t panic. There are several things you can still do put money aside and lower the overall cost of tuition.
Worried about how you’ll ever save up enough money to cover the huge amount your children will need for their college education? When you start while your children are young, you have many good options.
Helping a grandchild with college expenses is a very satisfying way to use some of your discretionary funds. The most efficient and flexible means to accomplish this is through a plan called a 529 Plan.
Some young adults manage to acquire a fair amount of financial literacy. In the classroom or the workplace, they learn a great deal about financial principles. Others lack such knowledge and learn money lessons by paying, to reference William Blake, “the price of experience.”
Families with students heading off to college this fall take note: The interest rates on all newly-issued federal loans have been reduced for the coming academic year -- but those reductions are much more pronounced for student borrowers than for their parents.1
For instance, the interest rate on Stafford subsidized and unsubsidized loans for undergraduates will decline to 3.76% from 4.29% last year.1 For graduate students, the Stafford loan rate will fall from 5.84% to 5.31% for the coming academic year.1 In contrast, the rate on Federal PLUS loans for parents is a full percentage point higher at 6.31%.1
Choosing a way to save for your child's education expenses may be your family's first college planning decision, but it certainly won't be the last. From making that first deposit, to selecting a college, to choosing a course of study, you and your child will be making choices that can have a financial impact for years to come.
How Will You Save Enough?
Starting to save for college when your child is young may give you the best chance for accumulating a significant amount of money. Section 529 plans -- prepaid tuition plans designed to lock in today's tuition rates at eligible institutions -- and college savings plans, which permit contributio...
As 2015 ended, Congress passed the Protecting Americans from Tax Hikes Act (PATH). Deep in its fine print were two “sweeteners” – tax changes designed to help parents with 529 plans.
You can now pay for computer hardware & software with 529 plan dollars.
Under the old rules, this was rarely permitted. In fact, federal tax law only allowed it if a university or college required students to have certain computer hardware, software, or computer-related technology as a condition of enrollment.(1)
That restriction is gone now. Starting this year, you may buy computers, computer software, associated hardware, and related equipment with 529 plan funds....
By now most Americans who are saving and investing to pay for college costs have probably heard that so-called 529 college savings plans allow tax-free distributions for qualified education expenses, potentially making them even more attractive and effective than in the past when they were only tax deferred. Add that tax benefit to other benefits of 529 plans, including high contribution limits, and many families may want to consider taking advantage of the plans.
But don't despair if you have already committed college-earmarked assets to another type of financial vehicle, such as a Coverdell Education Savings Account (formerly Education IRA)...
There are many choices for repaying student loans. This checklist can help you weigh them.
Actively managing your debt is an important step, and your student debt may be one of the biggest financial obligations you have. There are many strategies that could help you manage student loans efficiently.
Here is a checklist.
Choose a federal loan repayment plan that fits your circumstances:
The Standard Repayment Plan requires a fixed payment of at least $50 per month and is offered for terms up to 10 years. Borrowers are likely to pay less interest for this repayment plan than for others.
The Graduated Repayment Plan starts with a reduced p...