Saving money is the best way to prepare for college expenses. Savings is your
springboard to success. Saving today will determine what options are available
to you later in life. Regularly setting aside money will give you a good start
towards your meeting your tuition costs. Even if you only put in a small amount
that money will continue to grow with interest.
you have really considered how much it will cost for you to attend college then
the next step is finding out how much you think you can get in scholarships and
tuition waivers. Whatever remains is your expected family contribution. That
amount is your is your savings goal. The earlier you begin saving towards this
goal, the less you will have to set aside each payday
Even if you can't save enough to completely pay for your education, the money
set aside will still help ease the financial burden of starting college and will
decrease the student loans you have to repay after you finish.
Withdrawal Fees or Penalties
You need to make sure that you will be able to withdrawal the money you have
saved without a withdrawal penalty. Some savings plans and investments are
designed to last a particular amount of time. Withdrawing the money before this
time has expired will sometimes require a fee or a penalty. Ask about withdrawal
fees or penalties before placing your money with an institution.
Paying for college is easier when you invest money in an education IRA. An
Education IRA will accumulate interest tax free, and then you can withdraw money
from an IRA without penalty. Also, you can save money in a state-sponsored
tuition plan and not pay taxes on it until you withdraw the money.
You may withdraw funds from an IRA, without penalty, for
your higher education expenses. Funds can be withdrawn by relatives for their
spouse, child, or even grandchild. Usually, if you withdraw funds from an IRA
before you're 59-1/2, you must pay an additional 10% tax on the withdrawal
amount. This 10% tax is waived if the withdrawal is used to pay for
post-secondary tuition and fees.
For each child under age 18, families may deposit $500 per year into an
education IRA in the child's name. Interest will accumulate in the IRA tax-free
and no taxes will be due upon withdrawal for educational expenses
There are more restrictions and guidelines on the
education IRA. You can look for more information about tax benefits for higher