It is no secret that college expenses can exceed $20K a year for state schools and double to $40K+ for private schools which is why it is important to start planning for Baby Carter's future as soon as possible. I would not change my childhood for anything, but my family worked hard to live paycheck to paycheck with no money left over for college. As a service member, I lucked out and was able to make a dent in my college expenses with G.I. Bill benefits. Nevertheless, I hold multiple degrees and learned the hard way that college debt can sneak up on a student if not closely monitored. With current monthly college loan payments that mirror a mortgage payment, I will be paying off college loans until Baby Carter begins college! I want Baby Carter to have every opportunity to attend a great school and not have to worry about participating in random pharmaceutical lab projects to pay for tuition or have to be forced to take out a mortgage to earn a reputable degree. Additionally, as much as I would love to have Baby Carter grow up to be a Marine, it is hard to plan for military educational benefits in his case. This is why starting a savings plan as soon as possible is critical to his financial future. I will be the first to admit that I am personally, professionally (and as soon as I finish my EdD) educationally satisfied with my life, but I do not have the financial stability to write a check for his tuition outright. After some brief research, I found two popular college savings programs that may interest parents. An Educational Savings Account (ESA) or Education IRA is a non-deductible tax-free savings account that parents can contribute up to $2K a year with no limits as to how the money is invested. A 529 College Savings Plan is a tax advantaged savings plan that is opened in your state, another state, or directly with the university of choice.
As a military family, it is difficult to choose a state to pay into a 529 plan. This is where an ESA can be more beneficial. Unfortunately, the yearly investment cap of an ESA is $2K. If anyone has any other great college savings plan ideas I am more than open for recommendations.
The link below is a great reference to the advantages and disadvantages of the ESA and 529 savings plans. The link goes into greater detail than my post.
No comments:
Post a Comment