One option that most parents choose when it comes to college savings plans is the 529. For those in the dark, this plan lets you invest a certain amount of money every year in stocks, bonds, mutual funds, and other investment options with the understanding that the money will be used to fund your child's education.
Perhaps the biggest deterrent to education is the lack of adequate money. To ensure that their children learn, parents must have earned and saved away hundreds of thousands of dollars and planned for their education right from their childhood. If not, you're at the mercy of loans that bloat up with interest, unless your kids are smart and savvy enough to qualify for aid. However, many parents with a steady income prefer to be prepared and set aside an amount every year rather than have to deal with the costs all at once when their child is ready to start college. And with tuition costs rising every year, it pays to have the foresight to get ready today for a day that is bound to arrive ten or more years later.
The 529 may be the way to go becasue it comes with a host of advantages:
However, in spite of all these benefits, the 529 is viable only if:
A suitable alternative to the 529 is the Coverdell plan which allows you to set aside money that you can use for primary and secondary education as well. However, you can invest only $2000 every year, so if you want to put in more money, a 529 is the way to go.
Some parents choose both Coverdell and 529 plans for the same child. This way, they're boosting the security option of these plans and ensuring that their child will have enough money to afford the education of their choice.
This guest post is contributed by Carrie Oakley, who writes on the topic of online college . Carrie welcomes your comments at her email id: carrie.oakley1983(AT)gmail(DOT)com.
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