College Savings | Freeman Capital

College savings

with this easy 5 step formula.

Your kids or grandkids are counting on you to go to college. Of course, given the rate at which college tuition and fees continue to rise, you may also be wondering how on Earth you’ll be able to pay for it. Stashing money away while the kids are still tiny can make the difference between an affordable degree and a mountain of student loan debt that your child could be paying off for decades.

The average cost of tuition and fees.

  • Around $35,000 for private colleges
  • Close to $10,000 for in-state residents & public colleges
  • Over $25,000 for out-of-state public universities

Source: College Board

What is a college savings plan?

A college savings plan aka 529 plan, is a tax-advantaged savings plan designed to encourage saving for future education costs. 529 plans, legally known as “qualified tuition plans,” are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code.

Prepaid vs. Saving Plans

Prepaid plans

Prepaid tuition plans allow you to pay for credits or classes at colleges and universities that participate.

  • Pay for future room and board at colleges and universities 
  • Prepay for tuition at elementary & secondary schools.

Education Savings Plans

Education savings plans let you save for qualified expenses related to education.

  • Tuition

  • Mandatory fees 

  • Room and board. 

You can take the money from education savings plan accounts to pay for any college or university. For those planning on going to another country, you can even pay for colleges and universities in different countries. You can pay up to $10,000 per year per beneficiary, that way if you have more than one college bound kid you can plan accordingly.

What are the benefits of a 529 plan?

  • Unlike Roth IRAs and Coverdell Education Savings Accounts, 529 plans have no income limits, age limits or annual contribution limits
  • You get income tax breaks
  • You have full control of your investment account
  • You can set up automatic contributions 
  • Lifetime contribution limits vary by plan, ranging from $235,000 – $520,000
  • If you’re looking to reduce your estate taxes you can give a lump contribution of between $15,000 and $75,000 that can be distributed over a 5 year period
  • You get a CERTIFIED FINANCIAL PLANNER™ professional to help you maximize your investment

How much do I need?

Minimum contributions can range from $0 all the way up to $250. But that’s just the beginning. 

A CERTIFIED FINANCIAL PLANNER™ professional is one of the greatest resources to help you choose the best path for your financial situation. That’s why we have bundled financial literacy, investing and personal financial planning in a technology that is trusted and utilized by Americans everywhere.

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