We don’t have college accounts for our kids yet- I swear we planned to open them, but then job stuff and moving stuff and then I blinked and my oldest is 9. I know that’s not a ton of time to build up, but I want to at least have something there for them- maybe cover the first year or two? Or would it be better somehow (financial aid-wise) to not put it aside at all? I got grants and loans, so I have no idea how this works.
H just got an unexpected bonus and I’d like to use it to set up an account for each kid- but where do I go? My regular bank? Is there somewhere that has better interest? Returns? I don’t even know what it’s called. Where do I start? Thanks!!
I'm an aid admin at a college, contrary to popular belief having college savings is not a bad thing. Make sure those savings are in your name because the students savings are expected to be used at significant levels. I like 529s, I have 2 for my daughter mostly because I haven't rolled my old state to my new state plan. I don't put a ton in because I get a very generous tuition benefit. My state gives me a tax break for money I add, but it's limited to $1000 a year per kid and I have to use my states plan. Another plan I'll be using is a Roth IRA. Retirement savings don't count in the aid formulas (well currently they don't), and you can withdraw your contribution from the Roth without penalty as long as you don't touch the growth until you are old enough.
I would open a 529. Generally the thinking is: if your state has a tax credit for residents who join your state's plan, then you should do that. (i.e., If you live in Virginia, and there's a Virginia State tax credit for contributions to the Virginia 529, then do that one). If your state doesn't have a tax credit, you have more flexibility but many people recommend the Utah plan.
Post by sometimesrunner on Jul 2, 2021 9:37:03 GMT -5
We use 529 plans, as well. Our state offers a tax credit, so we use our state's 529 plan. If your state doesn't, there is usually a list floating around the internet of the "best" 529 plans so you could open one in a different state instead. We also just opened out 529s in the past year or so (kids are 9 and 5), so you're not alone.