For many, a college education is something they dream of, and with proper planning, it can become a reality. According to the
Federal Reserve the typical amou
nt of education debt in 2018 among those with any outstanding balances was between $20,000 and $24,999. Ohio residents are slightly above the national average debt ($28,650) at $30,629 at the time of graduation with 62% of students having some form of college loan. Pre-planning for the cost of a college education can significantly reduce the burden a student loan may be on a college graduate entering the workforce.
Starting to save for college is a great goal to aspire for, but it should not be the only goal. Financial experts recommend saving for retirement should be a priority. Only with additional funds, should college savings be pursued. Students have many avenues to help reduce the cost of college, like grants, scholarships, and work-study programs, but retirement planning should not be neglected.
There are many ways that parents, grandparents, and family can save for a child’s educational expenses. When choosing an option there are several factors to be considered:
- Eligibility
- Contribution limits
- Tax implications for deposits & withdrawals
- Savings and investment options
- Guidelines for what the funds can be used for without penalty
- Who has control over the account
- Impact the savings will have an opportunity for financial aid
- Transferability of funds
The College Savings Options factsheet outlines several options available and some basic information on each option. It is advised to work with an accountant or financial consultant for specifics on each plan prior to investing in a college savings option.
For additional information, please check out these additional resources. Check the date of the publication to ensure you are receiving the most up-to-date information.
Financial Industry Regulatory Authority
Morning Star: Stocks, Mutual Funds and Investments
