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An education after high school is an investment that will last a lifetime. Savings can definitely help ease the burden of paying for a college education. Starting a long-term savings plan as early as possible is the best method of funding your child's education. If you start early, you will save more, and it will be less of a pinch to your monthly budget in the future. The following information can help you get started now! Tax Advantage Educational Incentive Programs College Savings Iowa Iowa's state administered 529 plan allows parents, grandparents, relatives and friends to contribute toward the education expenses of young people. The plan offers tax advantages and low fees. Several people may contribute for the same beneficiary and one person may contribute for several beneficiaries. Coverdell Educational Savings Accounts Parents or grandparents can set aside up to $2,000 (after taxes) to pay kindergarten through college education expenses. The student does not pay taxes when the withdrawals are used for qualifying education expenses. Roth IRA Wage earners making less than $110,000 individually or $150,000 as a couple can set aside up to $4,000 (if under age 50) and up to $4,500 (if over age 50) in after-tax dollars. Distributions from your Roth IRA may be taken without a tax penalty as long as the distribution is used for qualified education expenses. Upromise A free rewards program that gives back a percentage of your spending with specified companies as college savings. Parents, grandparents, relatives and friends can help save for your child's education by joining as well. College Savings Plans Network A national non-profit association dedicated to making college more accessbile and affordable for families. The website provides detailed information about 529 college savings plans and allows you to compare plans from around the country. Investment Tools Stocks Certificates which indicate ownership in part of a company. Shareholders fully participate in opportunities for profit and loss of the company. Bonds Loans made to the issuer of the bond with the promise of an interest rate paid to the bond purchaser over a period of time and until the loan is repaid. Bonds are issued by businesses and governments. Mutual Funds A collection of stocks or bonds held in one fund to diversify investments and reduce volatility. |
