College Savings Plan
Do college students save enough? A study by National Student Financial Wellness indicated more than 70% of students are concerned about their financial health. The study showed that seven out of ten students surveyed said they were stressed because of lack of funds to pay for their studies and another thirty percent of students were concerned about the expenses they had to deal with every month.
Lack of funds is also the reason why almost 30% neglect or drop out of studies. Only 3% of students had savings to manage their studies while almost 36% relied on loans and scholarships to complete their education.
By the time of graduation the borrowed debt would be between $30,000 and $50,000 as indicated by 24% of students surveyed. Clearing the education debt takes significant time and this could be one of the major reasons why Millenials delay major life events such as getting married or buying a home.
With costs of completing a four year degree reaching $200,000, starting to save as early as possible is key to avoiding huge debts and stress!
College savings plans
The 529 plan is a tax free option to start saving for college education. Because the features of 529 vary from state to state in the US (Trivelloni Asset management uses the Michigan Education Savings Program), consulting a professional financial adviser who is a fiduciary by law would be prudent. The self-directed plan enables investment to fund studies in accredited colleges while the prepaid tuition plans allow parents to pay for future tuition credits.
The self-directed savings plan is very similar to the 401k retirement savings plan. The fund value can fluctuate based on the market performance of the option selected for investment. The prepaid plans are ideal when parents have a basic idea of the costs involved for the course their child would study in future.
If you and your family would like to learn more about how Trivelloni Asset Management can help prepare you for college, fill out our form and we will set up a free consultation to discuss the possibilities of setting your family up for success!