My Article Database: Free Articles for Teaching and Studying English as a Foreign Language in China - by Paul Sparks




 Homepage
 About Me
 Teachers
 Students
 Lessons
 Photographs
 Links
 World News
 ICQ Chat
 Contact Me
 Articles
 
My Article Database:

 

Accounting
Acne
Adsense
Advertising
Aerobics
Affiliate
Alternative
Articles
Attraction
Auctions
Audio Streaming
Auto Care
Auto Parts
Auto Responder
Aviation
Babies Toddler
Baby
Bankruptcy
Bathroom
Beauty
Bedroom
Blogging
Body Building
Book Marketing
Book Review
Branding
Breast Cancer
Broadband Internet
Business
Business Loan
Business Plan
Cancer
Car Buying
Career
Car Insurance
Car Loan
Car Maintenance
Cars
Casino
Cell Phone
Chat
Christmas
Claims
Coaching
Coffee
College University
Computer Tips
Cooking
Cooking Tips
Copywriting
Cosmetics
Craft
Creative Writing
Credit
Credit Cards
Credit Repair
Currency Trading
Data Recovery
Dating
Debt Relief
Diabetics
Diet
Digital Camera
Diving
Divorce
Domain
Driving Tips
Ebay
Ebook
Ecommerce
Email Marketing
E Marketing
Essay
Ezine
Fashion
Finance
Fishing
Fitness
Flu
Furniture
Gambling
Golf
Google
GPS
Hair
Hair Loss
HDTV
Health Insurance
Heart Disease
Hobbies
Holiday
Home Business
Home Improvement
Home Organization
Interior Design
Internet Tips
Investment
Jewelry
Kitchen
Ladies Accessories
Lawyer
LCD / PLASMA
Legal
Life Insurance

Return to Articles about College and University

3 Alternatives For Investing For Your Child’s Higher Education Costs

by: Jay Fran
With higher education tuition increasing at double digit year over year percentages an effective saving plan for your kid’s education is becoming much more important than it has been before. Most families will discover that their future higher education costs will be much more than they have saved for their kid’s education. This leaves many kids to be faced with obtaining financial aid to pay for a portion of their college education. The goal of this article is to explore the pros and cons of 4 common investment options when saving for college. This article will also explore why some of these options are better than other when considering a portion of your kid’s education may be funded by financial aid.

529 College Savings Plan: - A 529 college savings plan is a fairly new investment option for college saving. It allows just about anyone to save for college. There is a long list of benefits of a 529 college savings plan, but perhaps the most important is that your earnings grow tax free if you use it for qualified education expenses. Additionally, the maximum amount you can contribute to a 529 plan can go as high as several hundred thousand dollars depending on your State. In the event you do not use the funds for college, you can still withdrawal your earnings, but you will have to pay taxes and a 10% penalty. The penalty will be waived if your child receives a scholarship, or your child becomes disable or dies.

529 plans can typically be purchased through a broker or mutual fund company, but a disadvantage is that investment choices can sometimes be limited. Since qualifying for financial aid is based on a calculation that considers your kids assets, another big benefit of a 529 college savings plan is that the money in the plan is classified as a parents assets so less that 6% of the value counts against your kid’s financial aid eligibility.

Uniform Gifts to Minors Act/Uniform Transfers to Minors Act

(UGMA/UTA Custodial Account): - The benefit of a UMGA/UTA Custodial Account is that there is no limit on the contribution and it is easy to set up at most financial institutions. However, the limitations far outweigh the benefits. The first limitation of a UMGA/UTA Custodial Account is that these types of accounts offer very little tax advantage. If your child is under 14, only the first $800 of income is tax free, the next $800 is taxed at your child’s tax rate and after that there is no tax benefit at all. The other big limitation is that the account has to be set up in your child’s name. As a result, if your child needs financial aid all of the assets will be reviewed at a 35% rate. Therefore, this type of account is not advisable for those who may need financial aid.

Coverdell Education Savings Account (CESA): - A Coverdell Education Savings Account is very similar to a 529 college savings plan. The main difference is that with a Coverdell Education Savings Account you can only contribute $2000 per child and to qualify your adjusted gross income must be less than $110,000 if single and less than $220,000 if married filing jointly. The account is classified as a parent’s asset so less that 6% of the value counts against your kid’s financial aid eligibility.

In the end, parents should consider planning for college to be a highly important process. The above 3 alternatives can make this process much more easy and financially sound.

Copyright (c) 2005, by Jay Fran. This article may be freely distributed as long as the copyright, author's information and the below active live link is published with the article.

About the author:
http://www.motorcycle-financing-guide.com/directory/directory.phpJay Fran is a successful author and publisher at Motorcycle-Financing-Guide.com, a website that offers a wide selection of online motorcycle lenders providing online application facilities for motorbike - motorcycle loans or motorcycle refinancing.




 

New! Watch Online Articles with YouTube for Free:

 

 

 

 

Click Here to Return to Top of Page