Like buying a home or investing for retirement, providing a college education for your children or grandchildren may be one of your major financial goals.
If that’s the case, you’ll need a plan, since funding a college education has a specific timeframe. Plus, simply putting money in a savings account probably won’t get the job done, since tuition has historically increased much faster than the rate of inflation.
That means the money you save now probably won’t have the same buying power when it’s time to pay for college.
Fortunately, you have lots of choices when it comes to investing for higher education, including 529 plans — named after the section of the IRS tax code that describes them.
Between the 1996-97
and 2006-7 academic years, tuition, room, and board at public
colleges increased by 32%, and at private colleges by 22%*.
If you want to keep pace with rapidly rising tuition costs,
it’s
best to start investing early.
*Source: Digest of Education Statistics, 2007. National
Center for Education Statistics.
Tuition, fees, equipment,
supplies, books, room, board, and special needs such as aids
for the visually or hearing impaired are all qualified education
expenses, which means they are eligible for the tax benefits
of participating in a 529 plan.
