WCSU- Westside campus
Most states offer their own 529 plans, but you don’t necessarily need to live in a particular state to invest in its plan. Often the 529 plan in your state of residency offers the most tax advantages, but take some time to research the differences. The most popular 529 option structures the plan as a savings account that offers different investment portfolios. Some portfolios are age-based, meaning early on you’ll invest aggressively in growth-based securities such as U.S. and international stocks and then the portfolio automatically reallocates to more conservative investments as the child approaches college age. Another choice is to create an individualized portfolio in which you determine your investment strategy and adjust it as necessary to meet your risk tolerance. Investment options are determined by the investment company that administers the state program.
NOT A DEPOSIT, NOT FDIC – INSURED, NOT GUARANTEED BY THE BANK, MAY GO DOWN IN VALUE.
WCSU- Westside campus
Coverdell Savings are gaining popularity because they offer many of the same tax advantages as 529s and the accounts can be used for any qualifying expenses between kindergarten and college, including tuition, books or computers. Coverdell Savings were in limbo until tax laws in 2013 solidified their benefits to participants. They rely on investments in stocks, bonds and mutual funds to help families save more money for education expenses.
NOT A DEPOSIT, NOT FDIC – INSURED, NOT GUARANTEED BY THE BANK, MAY GO DOWN IN VALUE.
When so many families have their net worth invested in their home, it's logical to take out a home equity loan or line of credit or a new mortgage through a cash-out refinance to pay for college expenses. There are multiple options when it comes to borrowing against the value of a home, each with fixed or adjustable rates and money that's available as a lump sum or accessible as a line of credit when you need it.
Whole life, variable life and universal life insurance policies provide cash value that policyholders can borrow against to finance a college education. Financing rates vary depending on the company and policy. Policyholders determine when the money will be repaid, but, at minimum, the interest must be paid on the loan every year to ensure the policy maintains enough cash value to remain active.
Not a bank or bank affiliate obligation or deposit. Not FDIC Insured. May lose value.
Loans against an employer-sponsored 401(k) retirement plan also are available. By law, the maximum loan amount is 50% of the vested account balance, and the loan must be repaid within five years. If it's not, the loan is treated as a non-qualified withdrawal, which can carry stiff tax penalties if the plan holder isn't 59 1/2 years or older. Interest rates vary by plan.
There are multiple options available when planning for college expenses. Consult your financial advisor for accurate information about tax implications and which financing choice is right for you.