Education Savings Planning

You might be planning to help your children or grandchildren pay for education expenses. Or, maybe you're thinking of taking classes after you retire. The first step in planning for education is deciding what kind of financial help you want to provide.

Starting today, you can begin to create an education savings plan by deciding what education means to you.

• Do you feel strongly about private vs. public education?
• How much is too much to pay?
• How does your plan impact your current taxes, future taxes, financial aid eligibility and tax credits?
• How long will it take to save what you need?

Once you have a sense for what you'd like to save for, you'll have a better idea of how much you'll need to put away. Your total cost can depend on several factors, such as:

• Student's age
• Academic standing
• Private vs. public tuition costs
• In-state vs. out-of-state tuition costs
• Financial aid opportunities (federal, state)
• Scholarship awards
• Type of degree sought
• Housing costs (on- or off-campus)

The type of plan you choose for education savings can have a major impact on your financial situation and on your children's. Some of the most common plans include:

• Uniform Gifts to Minors/Uniform Transfers to Minors Accounts (UGMA/UTMA): Your child ultimately controls this type of custodial account. They will be able to use the funds for education, as well as other expenses.
• 529 College Savings Plan: A 529 plan targets college tuition and expenses. It stays under your control, plus it offers certain tax and contribution advantages.
• Coverdell Education Savings Account: Also offers tax benefits. It has a maximum contribution limit of $2,000 per year.

Dreams can change. New opportunities can arise. As your education needs and goals evolve, you and an advisor can work together to revisit your plan and make adjustments to help you to stay on track. A financial advisor can help you monitor long-term issues like:

• Calculations used by institutions for determining financial need
• Laws governing taxation on and distributions from education savings
• Investment performance
• The shifting balance of education savings in your overall financial picture