How soon is too soon to plan college funding?
It’s NEVER too soon.
A good way to start, is by setting up a 529. For those of you who don’t know what a 529 is, it’s a tax-advantaged investment vehicle designed to encourage saving for the future higher education expenses. It also possesses significant benefits relative to its counter-part, the UGMA/UTMA.
It’s good to start early with a 529 as your investment grows tax deferred and you get the effect of compounded growth. However, stick with a 529 opposed to a UTMA/UGMA account. Some important distinctions to name a few:
| 529 | UTMA/UGMA | |
| Assets | Parent (assessed at 5.65%) | Student (assessed at 35%) |
| Growth | Tax deferred | Taxed annually |
| Beneficiaries | Can change beneficiaries | Cannot change |
| Ownership | Parent | Student |
Also, engage a college financial consultant as early as the student’s Sophomore or Junior year in high school to ensure you’re well positioned and not over exposed. Last, keep in mind for the class of 2011, 2010 is the financial base year. Meaning, your expected family contribution is based on income and asset valuation in 2010, not 2011. Hence, the importance to talk to a professional no later than the student’s Junior year. You’re at a significant disadvantage once the student enters their senior year.
For more information about preparing for your kids’ college education you can contact Mitch at mitch@collegefinancial-consultants.com, toll free at 877-859-3243 or directly at 408-395-1200
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Mitch has spent the last 12+ years in the technology sector while residing in Northern California. As President, Mitch brings to College Financial Consultants (CFC) a wealth of management experience and a true entrepreneurial spirit. Being mentored by his father for the last several years, Mitch is helping CFC expand and help families from coast to coast. As the company expands its footprint, he is determined to maintain the same core principles that the company was built on - exceptional service and dedication. To talk to him about your children's college goals send him an email at mg1031@gmail.com.
