College savings: Start early, use your resources

Parents generally don’t have to be convinced of the value of a college education for their children. Studies show that college graduates not only earn more, but are healthier, more satisfied with their jobs, and more likely to remain employed during tough economic times.
But paying for college becomes more challenging every year. The average cost of a year of college in state is over $17,000 and some private schools are approaching $50,000 a year. Starting early and considering a state sponsored savings vehicle called a 529 plan may help you down the road.
Benefits of a 529 Plan:

All money grows federal and state income-tax free. All withdrawals used for qualified higher education expenses are exempt from federal income tax (qualified expenses include tuition, fees, room and board, books, and other supplies). The account holder retains control of the assets regardless of age. Most plans have very low minimum monthly contribution limits (around $25), making them affordable for many families. Money can be used at virtually any accredited college in the country.] The beneficiary can be changed at any time to another member of the beneficiary’s family. Many states offer maximum contribution limits of $300,000 or more. Assets within 529 plans are protected from bankruptcy. Assets are considered parent’s assets, so count less severely for financial aid (only 5.64%). There are a variety of investment options available from more conservative investments to growth-oriented investments. College calculators can help you plan ahead. If you’ve got a newborn and plan to send them to Harvard (or my favorite, Notre Dame)—you’ll need almost $265,000 to cover all the fees. Just remember, something is usually always better than nothing, so don’t be discouraged.

–Cathy Brown, CB Wealth Management