In about a month or so, students will be heading to college
– and their parents, with varying degrees of gloom, will be
reaching for their checkbooks. Higher education carries some high
costs – so, if you have children or grandchildren, you’ll want to
prepare yourself.
In about a month or so, students will be heading to college – and their parents, with varying degrees of gloom, will be reaching for their checkbooks. Higher education carries some high costs – so, if you have children or grandchildren, you’ll want to prepare yourself.
Just how expensive is college? During the 2003-2004 academic year, the average total charges – tuition, fees, room and board – at a four-year public institution was $10,636, while the comparable average cost for a four-year private school was $26,854, according to the College Board. And college costs have been rising faster than the general rate of inflation; when your child is ready to move into the dorm, you could be looking at numbers considerably bigger than these.
To help pay these hefty bills, you may want to consider some college-funding vehicles:
Section 529 plans are available as pre-paid tuition programs or savings plans. In this tuition account, you buy future tuition credits at an in-state, public school. Because tax issues for 529 plans can be complicated, please consult your tax adviser.
Depending on your income level, you could also contribute up to $2,000 annually to a Coverdell Education Savings Account. Coverdell earnings and withdrawals will be tax-free, provided you use the money education expenses.
