These days, there are a staggering number of ways to save for higher education, as well as several tax incentives that may assist you when you begin paying for college. What’s more, there is money available, both in the form of grants and loans for which you may be eligible. Knowing how to position yourself to take advantage of the incentives, minimize taxes and maximize your control over the assets you’ve designated is the focus of College and Financial Aid Planning.

The process of planning for college will answer the following questions:

As parents, do we want to pay for all of the expenses associated with our children’s education, or just a portion?

The cost of higher education is made up by not only tuition and room and board, but also the cost of medical insurance, fees, books and equipment, and other living expenses. To ignore these expenses may mean that you will be poorly prepared for the true cost of college, and unable to achieve your objective as planned. Depending on the institution, these miscellaneous costs may be as much as 25% of the overall cost of the education.

How much will college cost by the time our children enroll?

Tuition, room and board, and miscellaneous expenses to attend a private university currently cost around $30,000 per year on average, while state institutions cost around $16,000. Unfortunately, these costs have been increasing by over 7% per year, recently.

How much will we need to save to reach our goal of paying for college?

Using a Monte Carlo Simulation, we can calculate the likelihood of success in paying for college given different levels of ongoing monthly or lump sum savings. This puts you on a path in which you can choose how much to save, given a potential outcome with which you are comfortable.

What is the best way to save for higher education?

Options to save for college include Custodial Accounts or Uniform Transfers to Minor Accounts (UTMA), Coverdell Education Savings Accounts (ESA), 529 Accounts, ROTH IRAs, Traditional IRA’s, 401(k)’s and other qualified plans, 2503(b) or 2503(c) Trusts, Individual and JTWROS accounts, and Home Equity Lines of Credit (HELOC). We can determine which of these make the most sense, given your objectives.

Can we qualify for financial aid?

A popular misperception is that financial aid is only available to those with limited incomes. While this is partially correct, it makes sense to review your financial statement and household income to expose opportunities in which income and assets may be shifted among family members, which may enable you to qualify for assistance in one form or another.

Don’t make your decision based on a conversation held around the office water cooler. Let us assist you in developing a plan to keep you and your family on the path to higher education.