How To Help Pay for College
Planning for college can be daunting, but it doesn't have to be! There is no "right" way to save and prepare. It's all about finding what works best for your family and financial situation.
Check out the various options below, which families often combine to pay for college expenses.
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Bank Savings Account
This is a traditional method for growing your child's savings through regular deposits. Remember: interest rates on these accounts can be very low, so it may be hard to build wealth beyond what you contribute. Also, the interest earned on bank savings accounts is usually taxable.
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Coverdell Education Savings Accounts
Also known as ESAs, these accounts allow you to save up to $2,000 each year for each child. This is a "tax-deferred" account, and the funds don't have to be used for college. Savings can be used to pay for qualified college or any K-12 expenses tax-free. Contributions can be made until your child reaches age 18 and must be spent before the child turns 30.
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529 College Savings Plan
One tax-advantaged option that helps families invest in education expenses is the 529 College Savings Plan. There is some risk, as the plan can be subject to fluctuations in the stock market, but the tax-deferred growth options make it an attractive choice.
So, what is a qualified education expense? Common 529 qualified education expenses include tuition and fees, books and supplies, computer software and internet access, room and board for students enrolled at least half-time, and special needs equipment.
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Stocks and Mutual Funds
These investments are more aggressive ways for growing your child's college savings. They can increase in value quickly but are subject to the ups and downs of the stock market, and there is no guarantee of payout.
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Gerber Life Insurance College Plan
The Gerber Life Insurance College Plan is an individual endowment policy that provides adult life insurance and matures in 10 to 20 years. The cash value grows over time, without risk from the market. Since you'll know from the start the amount that your child will receive at the end of the term, paying for college will be easier.
The Gerber Life Insurance College Plan has a guaranteed payout that can be used for a number of things, such as higher education, starting a business, technical training or even the down payment on buying a home. As the beneficiary, your child will receive the full payout amount if you pass away before the policy matures.
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What’s Best for My Family?
Think about what you're most comfortable with. Are you okay with taking on a little risk, or do you want something more stable? Would you like to limit funds to college use only?
Whatever you decide, it's best to start early. You're protecting and preparing your child for their future in every other way, so it makes sense to take the final step and make sure that your child will be financially prepared as well.
Have questions about your college planning options? Call Gerber Life at 1-855-905-0640 today. We’re here to help.
Please consult with your legal, financial, tax and/or other professional advisors for guidance concerning your particular situation.
