Certified Financial Planner with Access Wealth Offers Tips, Strategies & More
(East Hanover, NJ, NOV 13, 2023) — Congratulations on the birth of your child (or grandchild).
Now, what can you do to help pay the staggering cost of college?
With some private schools now costing as much as $80,000 a year – just think what they will cost 18 years from now – planning needs to be done sooner rather than later.
Leo Chubinishvili, a Certified Financial Planner with Access Wealth in East Hanover, NJ, recommends opening a 529 college savings plan at the time of the child’s birth. “This way you benefit from compound interest over time, in addition to the gains that are not taxable as long as the funds are used for education. Additionally, setting up automatic monthly contributions will steadily grow the education fund. Potentially, encouraging gifts from family and friends to the educational fund instead of traditional gifts, can also help.”
An Education Savings Account (ESA) may make sense as well, he says. Other options for funding a child’s education could be UGMA or UTMA accounts, or treasury bonds. However, in most cases these offer no more benefits than found in a 529 plan.
What can you do throughout the child’s life to support his or her education? Mr. Chubinishvili suggests the following:
- Conduct regular reviews. This involves re-evaluating the investment portfolio and savings strategy at frequent intervals.
- Increase the savings. As your income grows, consider increasing contributions to the education fund.
- Explore state benefits. Investigate if your state’s 529 plan offers tax benefits or matching contributions and take advantage of them if applicable.
- Search for scholarship opportunities. Research and apply for scholarships and grants that can supplement education savings.
- Investigate prepaid tuition plans. Consider if prepaid tuition plans are suitable for locking in current tuition rates for state colleges.
Finally, he offers suggestions on what to do once the child is approaching college:
- Develop a withdrawal strategy. Put in place a strategy for withdrawing funds in a way that maximizes tax benefits and reduces the impact on obtaining financial aid.
- Apply for financial aid. Apply for financial aid early to understand what additional funds may be needed.
- Enforce the importance of managing a budget. Teach the child how to manage a budget to control expenses during college.
“You should also have a plan if the child chooses not to go to college or receives a full scholarship,” he says. “529 plans can be used for vocational training or transferred to another family member.”
Thank you,
Glenda, Charlie and David Cates
