ANCHOR: Do you have a spare $50,000 or $75,000 lying around? That’s the projected annual cost of a year at Stanford or Harvard in about 18 years.
ANCHOR: If you don’t have that kind of cash on hand today, Money and Real Estate Expert Ilyce Glink has some ways for you to save up for your children’s college education costs.
ILYCE: The cost of a college education has been rising faster than the rate of inflation. How fast? Take a look at the cost for tuition, room and board today and by the time your infant is ready for college:
TODAY 18 YEARS
Ivy League (Harvard, etc.) $35,000 $75,000
State Schools (U of I) $10,000 $20,000
Community College $1,000 $3,000
ILYCE: It’s nice to think you’ll be able to entirely foot the bill for your children’s education. And if you commit yourself to saving, you might get there. One of the best programs is a 529 College Savings Plan
Advantages of a 529 College Savings Plan
- Earnings grow tax-free until used to pay tuition.
- Funds are then taxed at the student’s rate.
- Maximum contribution is $10,000 per year per child.
- Maximum contributions can total $160,000.
- No major impact on financial aid.
- Earnings may be state tax free.
ILYCE: Almost all states offer a 529 college savings plan. The good news is, the cash you save in any of these plans can be used to pay for college tuition at an accredited university or college anywhere in the country. So you can choose the Illinois Bright Start College Savings Program and use the proceeds to pay for your child’s tuition at Harvard or UCLA. Or you can choose the New York 529 plan. The big benefit of choosing the Illinois 529 plan – if you’re a state resident – is when you withdraw the earnings, they’re exempt from Illinois income tax, which is 3 percent.
ILYCE: Here’s how the Illinois Bright Start College Savings Program works.
Illinois 529 Plan
- $25 minimum initial investment; $15 subsequent investment
- Age-based portfolio using a blend of stock and bond funds, and CDs.
- Annual program management fee of about 1 percent for Salomon Smith Barney.
- Banks may charge up to $30 for enrollment
- Ranked as one of the best programs for state residents.
ILYCE: There are a bunch of good sites out there that rank 529 plans. Make sure you read all of the details carefully before you sign onto the program. Now if you want to really boost your tuition savings, check out a brand new concept — www.UPromise.com. Here’s how it works:
Buy stuff from major retailers like Toys ‘R Us and Exxon
Companies make a contribution to your 529 plan
ILYCE: It’s a brand new plan, but if it works, it could make saving for college a whole lot easier.
Useful sites for 529 College Savings Plans