Will you be able to afford tuition costs for your children’s future higher education?

Share Post: facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.

In this fast-paced environment of rising college tuition, overwhelmed Americans continue struggling to make ends meet with regard to affording higher education. Inflationary pressure has caused tuition costs to reach unprecedented levels. The net cost (the cost after scholarships, grants and federal tax benefits) that in-state residents will pay for public colleges this year, rose 4.6% to an average of $16,510. That’s more than twice the rate of inflation, which rose just 2% over the last 12 months. As time passes, this trend only seems to be worsening.

Taking financial initiative can be the differentiating factor between affording and not affording these higher education costs. One of the strategies used to offset these rising costs are 529 college savings plans. These tax-advantaged investment vehicles were designed in the United States in effort to encourage Americans to save for future higher education costs.

529 Plans are useful education savings plans that can provide tax benefits and tax-deferred growth. These vehicles can be a very powerful tool for any family disciplined enough to save decades in advance. Investors can make contributions up to $300,000 throughout the plan’s lifetime. Some states offer residents an income tax deduction for a portion of their contribution. Additionally, there are no income limitations on donors making contributions. Parents do not need to be concerned about a student using these funds for purposes other than school. Assets in the 529 account will remain under the donor’s control; even after the student is of legal age.

It is important to note that for 529 Plans, there is one major restriction when it comes to distributions. Funds withdrawn from a 529 Plan for purposes other than education, will be subject to a 10% penalty, as well as federal income tax on the growth of the account.

The inevitable cost of college tuition is one that no one can afford easily, nor escape. The general population continues to struggle to pay for such highly inflated tuition fees. This struggle truly creates the need for an alternative savings strategy. The key to affording college is to start saving earlier than when your child reaches high school, middle school, or even elementary school. 529 college savings plans can be helpful in making higher education more affordable. With tax benefits, saving strategies and guidance, it is far easier for overwhelmed Americans to save for and one day alleviate such rising costs. Although savings may only be used for educational expenses, these savings plans force a discipline upon donors that they may have otherwise lacked. Don’t let the opportunity pass you by, for every year, week and day that elapses, you could have just inched that much closer to achieving future higher education affordability for your children.

Disclaimer: This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Share:
facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.
Share Post: facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.

RECENT POSTS

Spring Cleaning Your Finances to Lower Your Expenses

  We have all heard about Spring Cleaning and when most of us hear it we immediately think of the dreaded task of cleaning our homes.  Just thinking about it can be overwhelming and frustrating.  There are not many people I know that value and get a great deal of joy out of cleaning. T …

FanSaves with Kris McCarthy, Episode #124

Kris McCarthy is the Co-Founder and COO of FanSaves. Kris played seven years of professional hockey and won two Championships before transitioning into the front office. He served as the Director of Sales for Two Minor League hockey teams in 2017. That’s when he and Shannon Ferguson came ac …

Your Silicon Valley Bank Questions Answered

You likely have heard about the recent Silicon Valley Bank (SVB) collapse and probably have questions. Here, we provide you with unbiased answers to your questions.

Fresh Starts Registry, Episode #123

Olivia Dreizen Howell is the co-founder of Fresh Starts Registry, the first-ever support registry and resource guide for anyone navigating life changes, including divorce or breakup, moving, career changes, stepping into your truth, or starting again after grief. When Olivia got married at …

1 2 3 135 136 137

Get in Touch

In just 15 minutes we can get to know your situation, then connect you with an advisor committed to helping you pursue true wealth.

Schedule a Consultation

TweetsFollow Us