All financial analysts pretty much agree that the best way to pay for college expenses is to start saving very early. College is expensive and the cost rises annually. Planning early and saving money in a tax sheltered college savings account can increase the options regarding school choice. Without savings, it may be better to start at a less expensive option like a community college. Also consider what your college savings can buy. If you can’t afford the tuition at an Ivy League school, look into a good state school. Some examples of savings plans that can be used to help pay for a college education include:
1. Section 529 Education Savings Plans – These are available in every state and in most cases qualify you to receive special tax benefits.
2. Coverdell Education Savings Accounts – This account is established in the name of the minor who will use the funds later to pay for college. Contributions may provide tax benefits but can only be added until the child is 18 years old.
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|Jennifer Mathes, Ph.D.|