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A kids college savings plan is very important for you to do as a parent. You will want to start saving early! The sooner you start saving for college the better! You can start by saving a certain amount of money each month for your child's education and increase the amount you save over time. You would probably agree, that your kids college savings plan is important. Should I invest the money I have saved for my child's education in stocks, bonds or annuity? Well, based on the amount of time you have to invest this money will determine what financial vehicle is best for you. For instance, if your child is younger, the more risk you are able to take which may allow you to invest in stocks. However, if you have less time to invest the money you have saved for college, a money market or certificate of deposit may be where you should consider placing those funds. As part of my kids college savings, what is a 529 College Savings Plan? This type of plan allows you to save for your child's college education on a tax deferred basis. The contributions made to the plan grow until your child takes money from the plan when he or she begins college. As your child takes money from the plan to pay tuition, you pay taxes on the contributions made to the college plan based on your child's tax rate which is usually lower. For my kids college savings plan, are there any tax credits available to help pay for my child's education? Yes. The Hope and Lifetime Learning Credits. These tax credits provide a dollar for dollar reduction in the amount of federal income taxes you may owe. The Hope Credit can be used for college expenses incurred for the first two years of college, and up to a certain amount per year. The Lifetime Learning Credit applies to tuition costs for undergraduates and graduate students. This credit can be used for a certain amount of your child's college expenses each year. How can I pay for my child's college education if I do not have enough money saved? You or your child can complete a Free Application for Federal Student Aid(FAFSA). The FAFSA application will determine whether or not your child, will be eligible to receive financial aid from the following programs: grants, work study, subsidized and unsubsidized loans. Your child can also apply for various scholarships for college.
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