College Funding

Funding college expenses can be one of the most challenging feats for families today. There are a variety of ways to plan for such expense funding.

 MY OPINION: If there is one rule to follow based on experience of the past 30 years or so, it is; "Do not "borrow" or "use" funds from your retirement accounts to fund a child or grandchilds' education. First there is the added burden of taxes and possible penalties (if under age 591/2). Secondly there is the reality of Lost Investment Opportunity (LIO), the funds removed are no longer available to participate in the potential of the future. Last but not least, as good as ones' intentions may be, many who have tried this method have simply failed to repay the "borrowed funds" back to their retirement. Due to all kinds of crisis events including; dying, being down sized, poor health somewhere in the family, parents care, accidents (student as drivers, athletes or othrerwise), loss of insurance coverages ,etc... the list goes on. The bottom line is simply, your retirement  funds should be reserved for funding YOUR retirement."

The student may have to carry the responsibility of loan obligations following graduation. If they are focused and apply themselves it will be their income that repays the loan not your retirement.  The old axiom goes "Something for nothing ...is worth nothing!" The student needs to be committed and participate in the planning and paying for his or her education at all levels to get the most benefit out of the experience.

Education  funding presents a golden opportunity for Grand Parents to encourage and support the future of family members. Some families consider Trusts and specific Beneficiary designations to provide guidance to their heirs regarding the importance of higher education completion.

NOTE: Be sure to seek legal advise to determine the best tools to use in preparing  any  future  planning or wealth transfer.

Here are some of the current choices that may be considered.

NOTE: Keep in mind that each choice  has advantages and disadvantages depending on your situation. Be sure to consult  with your tax advisor to detemine which plan may best fit your needs.

UGMA/UTMA- Uniform Gift to Minors Account / Uniform Transfer to Minors Account

Coverdell Saving Accounts

State Sponsored 529 plans

Out of state 529 plans

What about Financial Aid?

Can Annuities help save for college expenses?

Grants and Scholarships? Special talents- Music ,Arts,Dance,Theater, Science, Math , Athletics?

Click Here for specific questions you may have regarding  your education funding concerns.