529 College Savings Plans

(Post by Marissa) I promise this will not turn into a financial website, but I am going to give my little tidbit on 529 plans. One thing I frequently worry about with having kids is their college educations. If we have six kids that is a lot of college money! And these days a graduate degree is required for so many professions so that just doubled the cost right there! I was fortuante enough to have all of my schooling paid for including room and board, etc. Granted, I went to BYU, which is very inexpensive, and my parents said they would pay as long as I went to BYU (what happened to the child choosing?). However, in 20 years even BYU will cost more, assuming my kids can go there. It gets more and more competitive each year. (For now, I am still banking on my kids going there! I really want them to go there.) Most people if they want to pay for their child's education need to start saving for it as soon as they start breathing (maybe even before!). So, what do I and most financial planners recommend...a 529 plan. Every state has one and you can invest in a different state's 529 plan even if you are not a resident. The funds grow tax deferred and they come out tax free as long as they are used for qualified schooling expenses. The nice thing is "qualified" includes things such as books and room and board! Some state's even give you a deduction for contributing to a 529 plan. If you do not use them for education, then there is a 10% penalty. However, you can always switch the beneficiary to the original beneficiary's child, or to another child, grandchild, etc. The intended beneficiary does not need to use all of the funds..they can be given to a different beneficiary.

And for any wealthy grandparents reading this...a 529 plan is an excellent way to pass part of your estate to your grandchildren, but rather than having them buy cars and shoes, they will have a college education. And if a grandchild starts misbehaving, well just roll their funds into my child's funds! Or for any of you reading this, you can try convincing your parents to set one up for your kids or contribute to the one you have set up, but most of us will probably be in charge of our child's education costs!

Here are some links to some websites with more information about 529 plans.

http://www.collegesavings.org/

http://www.savingforcollege.com/

Give the gift of education! (cliche i know...stolen from give the gift of life!)

Average Cost of Private University = 29, 026 per year (BYU is private, but an exception due to the church's sponsorship)

Average Cost of Public University = 12,127 per year