Save Money for Childs Education
Saving money for child’s education is the best investment which will prosper his future and will prove to be the best gift he could ever get from you.Today, the debt imposed on university students for their education has become terrible fate for students, in order to peruse higher degrees and graduation. Students have to repay their educational loan which could become major strain in their later life, disturbing their monthly budget.Parents who save money for their child’s education, assures good future and encouragement for further education and hazard free career. As the cost of education is increasing by very high rate these days, it would be a great idea to secure your child’s education beforehand.
Here are some of the methods to save money for your child’s education:
Savings Account: Savings account is the most common choice to keep the money aside as an investment. The greatest disadvantage of savings account is that it gives very less rate of interest.
CD’s (Certificate of Deposit): CD’s provide better interest rate than savings account but the rate of interest is still lowest as there are other options available which could provide better interest rate than CD’s.
ESA (Educational Savings Account): ESA is yet another form of savings account which gives tax free returns if the money is used for education. These accounts are IRS regulatory governed, with $2000 per annum cap for the deposit.
Prepaid College Plans: Prepaying college fees in advance gives an advantage of locking the tuition fees at current prices. Prepaid college plans are available at college and guarantee the increase in the value which also offers tax benefit for qualified expenses. Some of the colleges may allow out of state education as well if the parents agrees to pay the difference in the fees.
Investment Accounts: Investment accounts managed by state such as plan 529 can provide better returns but they involve risks. Since they are subjected to stock market they do not guarantee the returns. Withdrawals and earnings are exempted from federal taxes and do not affect the process of receiving financial aid for the student.
IRA Retirement Plan: IRA for retirement can exempt the withdrawal money from penalty before the age of 59; if the money is used for education.