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The Lowdown On Prepaid vs Savings 529 College
Savings Account
As costs keep mounting out of control trying to decide which
plan to save for college is becoming harder and harder for
every parent. Two savings plans have popped up recently that
may help take the sting out of the high cost of college
education for future students. The prepaid plan vs the 529
college savings plan. Which will work best for you is dependent
on many different factors that we will look over. Some things
in common with both plans is you need to start young and that
can't really be enforced enough with any kind of savings plan
for college.
The prepaid plan is where you buy tuition credits at today's
rates and use them when your child is ready for school. This
helps defray the costs for you. The biggest drawback in this
program is you really don't know how many credits you are going
to need. This is dependent on what your child's major could be
and also which college they decide to go to. Now you may also
have to factor in that not every college will participate into
the program. These are all things to consider before going with
the prepaid route.
The 529 college savings plan is where you put into an account
and let it grow over time. This is tax free and you can start
this when they are real young and have a nice little sum
waiting for the college student when they are ready. The
biggest drawback with this play is the fees they charge for
this. These fees are starting to get lower, but vary from state
to state. As Congress has stepped in and helped watch these
programs they are getting better and are becoming more user
friendly than ever before. At one time many of these prepaid
and college savings plans were changing about every six months,
which made picking a plan for your child almost impossible. So,
which plan is best for your child? This will depend on many
factors.
Costs are always going up and that will never change. Probably
one of the first things to look is a two year or four year
college. If the two-year college is in your child's future than
probably the prepaid system may work best for you. Now if the
four-year college is more to their liking than maybe the
investment would work out a lot better. Each case is different
and it will take time and research to determine which is best.
The other factors will include where you can get the best deal
and how much you have to pay out is always something to
consider. Different states have different plans and watch out
for brokers who will try to sell you higher policies in other
states. Do a little research and you could save a lot of money
in the long run.
Don't be afraid to ask questions and get the answers you need.
It's your money you’re spending and your child's education is
one of the investments that will last a lifetime. Nothing is
wrong with getting the best for your money. Prepaid or savings
account is something you will need to decide and which one fits
best into your budget. Both plans are good, but have drawbacks
that you will need to consider. No matter which one you choose
though the money you save will be worth it as your child or
grandchild will reap many benefits from your wise decision
early in their life. Education is knowledge and as they know
more they will earn more just a fact of life.
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