Affording the High Cost of College 529 Plans
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According to The College Board, the average annual cost for four years at a public college, including tuition, fees, room and board, books and supplies, transportation and personal expenses, is now around $45,000. The cost of private universities is close to $100,000.
With college costs rising at about 5% per year, the cost of a four-year college degree for a two-year-old could exceed 110,000 at a public college and $240,000 at a private university.
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Financial aid may help offset a portion of these expenses for families that qualify, but most aid is in the form of loans. Last year, families assumed over 39 billion in federal and state sponsored student load debt.
However you look at savings and paying for college is a concern today. Over the last several years Congress has taken action to help people save for college by creating the 529 plan. 529 plans allow people to put away up to 10,000 per year, per child and have that money grow tax-free. The assets inside the plan can be used for a whole range of expenses from tuition to books and school supplies.
529 plans can be used to reduce the size of your taxable estate while leaving you control of the asset. You are gifting the money used to fund the plan, but how the money is invested is your decision.The person who set up the plan can change the beneficiary on the plan once a year. This means that if the plan is in one child's name, and they don't go to school, the money can be used for another child or family member.
If you have children, grandchildren, or nieces and nephews you should look at 529 plans as a way to save for their education.
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