As many parents know, college students are no strangers to procrastination. Visit any campus coffee shop late at night and you’re guaranteed to spot some students engaged in last-minute cramming for exams.
Of course, some things, like college funding, can’t be prepared for overnight. Funding your child’s education takes planning and time. Read up on these college funding options from Thrivent Financial now to prepare for the future, and say goodbye to last-minute panic down the road.
529 plans are a tax-deferred way for anyone to invest in a child’s education. These accounts are controlled by your state or by a manager your state has appointed. Anyone can establish a 529 savings plan naming anyone as a beneficiary. Check with a financial professional in your area to find out how a 529 plan in your state could be helpful to your college-funding strategy.
This type of savings account allows you to build savings for any child, meaning grandparents, relatives and friends could also set this up. While the child’s name is on the account, the adult custodian is responsible for overseeing it until the child turns the age of majority. Custodial accounts can be used for any reason, meaning that if your savings exceeds the amount needed for tuition, your child could use it for living expenses or save it for something else.
The savings accrued in a Coverdell account can be used for approved expenses before your child goes to college, on K-12 expenses for students in private or public schools, as well as eligible post-secondary education expenses. A child can receive up to $2,000 annually in a Coverdell account until age 18.
Other types of accounts
Contact an attorney to see if a trust could be right for you. Trusts can be used for education and other purposes. Once the trust belongs to your child (usually at age 18), that money is no longer included in your taxable estate. Contributions to a trust have no minimum or maximum, and anyone can contribute.
While traditionally used for retirement savings, traditional and Roth IRAs allow you to withdraw funds penalty-free if used for educational purposes. Your contributions may be tax deductible and grow tax-deferred until withdrawal. Contact a financial representative about using IRAs for college funding, as this could affect your retirement strategy and financial aid eligibility.
Permanent life insurance
If something should happen to you, a permanent life insurance contract can help ensure that goals like education can be met, even if the unthinkable happens. In addition, permanent life insurance contracts accumulate cash value that can be used during your lifetime. Visit Thrivent.com for more information on types of life insurance to help you pay for college.
With so many options for college funding to choose from, selecting the best set of tools for you or your child can be difficult. A financial representative can help you decide which options are best for you to meet your family’s needs. Visit Thrivent.com to contact a financial representative, learn more about college funding options and even estimate your needs with a College Savings Calculator.
Financial ease, like a good report card, doesn’t come without preparation. Now that you have started studying, put your knowledge to the test and start forming your college funding strategy.