Question for the Money Doctors
Question submitted on Oct 17, 2013.
QuestionI want to start saving for my now-two-year-old child''s college education. What percentage of the total college cost should I aim to save? We prefer to have only a minimal amount in student loans.
We would like for him to attend one of our alma maters, both of which are in-state, public universities. What is the best option to save that offers the most flexibility in case he chooses to attend an out-of-state and/or private university?
Saving as much as you can afford, after funding for your own retirement accounts is a good starting point when saving for your child's education. Make sure you are fully funding your retirement accounts based on your retirement plan first. A planner such as a CPA/PFS can assist with designing both retirement and education plans based upon your goals and objectives. www.findapfs.org
A 529 college savings program is an excellent way to save for college. The funds can be used at any accredited college in any state. Distributions from the account are tax free and many states have additional tax benefits, such as deductions for contributions. Also, many state plans allow deposits from non-account owners (grandparents, aunts and uncles, etc.). In your case, given your goal of attending an in-state, public university, you could review the options for 529 plans within your state.
Finally, www.savingforcollege.com is has several calculators and worksheets you can use along with significant other information. The site is a great tool resource to assist you in setting your college savings goals.
For additional information visit http://www.360financialliteracy.org/