Are there tax penalties on a 529 plan if your child doesn’t start college by a certain date? Is a 529 plan the best way to save for college? Are contributions to a qualified 529 plan deductible? These questions and more about 529 plans are answered here.
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Grandparents Help With Saving For College
Original Air Date: July 3, 2006
Paying for college may include a combination of student loans, grants and scholarships. In some cases, parents are willing to take out loans towards their children’s college educations as well. Parents who want to borrow money to pay for college can take out PLUS loans, which begin accruing interestInterest is money charged for the use of borrowed funds. Usually expressed as an interest rate, it is the percentage of the total loan charged annually for the use of the funds. right away. In addition, the first payment toward a PLUS loanA Loan is an amount of money that is lent to a borrower, who agrees to repay it plus interest. must occur within 60 days of the PLUS loan’s disbursement.
When you’re trying to fund college you should look into all borrowing options. If you have significant financial need you may qualify for a federal Perkins loanA Loan is an amount of money that is lent to a borrower, who agrees to repay it plus interestInterest is money charged for the use of borrowed funds. Usually expressed as an interest rate, it is the percentage of the total loan charged annually for the use of the funds... To see if you’re eligible, you should fill out a Free ApplicationYour Application is a series of documents you must fill out when you apply for a home loan, or insurance policies. for Federal Student Aid (FAFSA) form.
How can you save money for college for you or your children? You can set up a 529 plan, which is named for the section of the tax code which covers it. A 529 allows you to invest money to be used toward college expenses such as books, tuition and computers. States may offer two types of 529 plans: a prepaid tuition plan or a college savings plan. Learn about 529 plans here.
Using savings bondsA Savings Bonds is a bondA Bond is a government's (federal or municipal) or a corporation's obligation to repay you your principalPrincipal is the amount of money you borrow if you're getting a home loan. If you're buying a bond, the principal is the amount you're lending. Typically, you'll buy bonds with a face value of ,000. If you buy a ,000 bond, your principal is ,000. plus a certain amount of interestInterest is money charged for the use of borrowed funds. Usually expressed as an interest rate, it is the percentage of the total loan charged annually for the use of the funds. over a fixed period of time. backed by the U.S. government. Savings bonds (which come in different series, like EE and HH) can be purchased in small amounts, either directly from a bank, the Treasury Department, or through a broker. They're non-transferable, and are not traded as are other government offerings. In September 1998, the Government began selling an inflation-indexed savings bonds. The I-bond guarantees that your return will out-pace inflation, and is actually based on the rate of inflation plus a fixed rate of return, perhaps 3 to 3.5 percent. to pay for college has its pros and cons.
When you want to get a college education you need to figure out how to fund it. One part of paying for college may include federal student aid. What criteria do you have to meet in order to get federal student aid for college?
A qualified tuition program is another name for a 529 plan, which allows you to save and invest money for college expenses. 529 plans or QTPs provide people with special tax benefits, such as accumulating earnings tax-free, if you meet education expense levels. QTPs may also be set up by educational institutions themselves.
Some of your childâ€™s education is bound to be paid for through scholarships, financial aid, and student loans. The rest can only be the product of aggressive investing. To make sure your child has college money available when they need it, you have to choose a well-diversified portfolio of mutual funds and start spending less and saving more by shaving costs from your budget.
How soon should you begin saving money so you can send your child to college? The best time to start saving for college is when your child is born. Saving for college beginning at birth gives you time to invest money in mutual funds and stocks. The sooner you begin saving money for college the more money you should have for your child’s college education.