For the 2006-2007 academic year, the average cost for a four-year private education (without room, board, books, and transportation) was $22,218 a year, up 5.9% from the year before, according to The College Board. And tuition for a four-year public school rose 6.3% to $5,836 a year.
So without a doubt, it’s time to learn about your college savings options.
529 Plans
There are two basic types of 529 plans, the most popular college savings plans today.
Tuition prepayment 529 plans are offered by individual states. You purchase a contract of credits toward the cost of college at in-state schools, allowing you to pay today’s prices for future enrollment. If your child goes to an out-of-state school, the value of the contract can be applied, but it may not cover the entire cost.
The 529 savings plans are investment accounts inside of which you can choose mutual funds and other investments.
Jack Oujo, a CPA and Certified Financial Planner based in Wall, NJ, said, “529 savings plans make more sense because most kids do not know where they are going until junior year of high school.’’
Your savings grow tax-free with all 529s, and when you take out the money, as long as it’s used for qualified education costs, withdrawals are tax-free.
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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