Financing Your Child’s College in Connecticut
Stamford Family Law Attorney
The process of saving for your child’s college education can seem daunting. Tuition is already substantial at so many universities, and, if current trends hold, will continue rising year after year right up to the time your child has graduated from high school and is ready to embark upon his or her freshman year of college. Thinking about all of this can be overwhelming, especially in light of the fact that your child’s college education seems so far off in the future, and you are already faced with other day-to-day costs associated with your child’s health, nutrition, and activities in the here and now. However, the old cliché will ring true again: your child’s first day of college truly will be here before you know it. As such, it is time to roll up your sleeves and get serious about financing your child’s college education.
With the right savings plan and preparation, you will be ready for the future. In crafting your personal plan for your child’s future, it is crucial to consult with a dedicated financial professional who can assist you in choosing the right savings accounts for a college fund, and explain the specifics of how colleges evaluate families in the financial aid process.
Time is of the Essence in Financing Your Child’s College Education
The reason it is critical to start saving and preparing for your child’s college education right now is because the sooner you start saving, the more time you will have for your savings to grow. Even a modest monthly investment can mature into a substantial college fund by the time your child is ready for college. For example, saving $100 a month from the time of your child’s birth would yield at least $40,000 by the time the child is 17 years of age.
A 529 Plan is One Savings Option For Families to Consider
One option for families to consider in financing a child’s education is a 529 plan. Originating in 1996 in the Internal Revenue Code, a 529 plan is an education-related savings account that is operated by a state or educational institution. The purpose of this plan is to help families save money for future college expenses. Not every state has a 529 plan, but Connecticut does. Like an IRA or 401K, a 529 plan is attractive because of certain tax benefits it offers. Savings Plans and Prepaid Plans are the two most common types of 529 plans.
Setting Up a Roth IRA Account for College Tuition
Another option to consider for financing your child’s education is setting up a Roth IRA account. A Roth IRA account can sometimes offer more freedom and flexibility on how to invest your funds versus a 529 plan. Additionally, if for some reason you child does not attend college, your invested funds can be moved to your retirement savings. Unlike a Traditional IRA, with a Roth IRA account your contributions are not tax deductible, but your earnings are tax-free if you withdraw them after the required five-year holding period and utilize the funds for eligible expenses such as college tuition.
How Colleges Look at Families When Offering Financial Aid, Scholarships, and Student Loans
When a student is admitted to a college, the college’s office of financial aid and scholarships looks at several factors with regard to the prospective student’s financial position. Among them are:
Cost of attendance: Tuition, room and board, textbooks, travel-related expenses, and personal expenses for one student for one academic year.
Expected family contribution: The contribution a student’s family is expected to make towards the cost of the student’s college education.
Demonstrated financial need: The amount that remains after a family’s expected family contribution is deducted from the cost of attendance.
Be Proactive and Start Planning Today
In financing your child’s college education in Connecticut, it is critical that you put a sound plan in place as soon as possible. If you have questions regarding funding your child’s education during a divorce contact the experienced Connecticut family law attorneys at the Prince Law Group, LLC. The Stamford divorce law firm assists clients with various legal matters pertaining to family law, divorce, the division of assets and child support. Contact our office to set up an obligation-free consultation at 203-653-8483 or fill out the online contact form.