Other Savings Choices
Roth IRAs are more typically used for retirement savings, but you can dip into your Roth to pay for college without penalty–under certain circumstances.
In 2007, you can save $4,000 a year to a Roth, tax-free, and if you’re over age 50, you can put in an additional $1,000 “catch-up” contribution. In 2008 and thereafter, contribution limits will rise. Rosen feels Roths are a last resort for college funding.
Custodial accounts, which are investment accounts in your child’s name, became less desirable with recent tax law changes, so now more of your child’s assets are taxed at a higher tax rate. Jane S. from Philadelphia used a custodial account for her daughter, who is now graduating from college. “There was a little left over after the last tuition bill, so the rest is now in her name. I could have never done that in today’s economy.”
Save While You Shop
Register your credit cards with Upromise and your account gets funded each time you buy from a Upromise partner. The small amount of money you accumulate can be transferred to a 529 plan.
Monica Matthews, Jeddo, MI 09/01/09
My husband I and never seemed to have the extra money to save for our kids college education. I was really worried when my son decided to attend a very expensive university. We worked hard in his senior year though and he won enough scholarships to cover his first year and much of the next 3 years of college tuition. If you work hard and help your teen apply for each and every scholarship they qualify for, you can win scholarships. Good luck to other parents out there! We got a lot of help from this website: http://www.how2winscholarships.com
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