I’m sure many of you can recall the movie classic – “Dirty Dancing” – starring Patrick Swayze and Jennifer Grey. But, no, that’s not the “baby” I’m referencing…
Rather, I’m referring to your newborn in swaddling clothes…
Should you really start a college fund at the birth of your child? While you consider the expenses of raising the new addition to your family – $250,000 and rising – starting a college fund should seriously be considered.
Consider the all-in cost of a 4-year degree today (tuition, fees, room, board, books, travel, etc.) which can range from $92,000-$300,000 and one can see the cost can easily reach a six figure sum. Then, consider the fact that most students take more than 4 years to earn that degree.
Like most financial experts, the Money Architects at Vivensure® recommend starting a savings plan early, thus giving your money plenty of time to grow. And, like most financial experts, we recommend what we believe to be the best college savings option available. But, unlike most financial experts, we do not recommend 529 Plans to our clients.
Why create a college savings fund? Because your family’s financial status will impact the ultimate financial aid packages offered by the schools that accept your student for enrollment.
According to the United States Department of Education, financial aid eligibility is based on a few factors, including an Expected Family Contribution (EFC). Schools will craft a financial aid package factoring in their published annual cost of attendance and then subtract the EFC. The remaining balance will be considered the family’s financial need.
The schools then use that financial need to assemble an aid package that could include federal grants, scholarships, any work-study options, and student loans. The Department reports, “The EFC is calculated according to a formula established by law. Your family’s taxed and untaxed income, assets, and benefits (such as unemployment or Social Security) all could be considered in the formula. Also considered are your family size and the number of family members who will attend college or career school during the year.”
The earlier you begin, the better. Of course, that’s the case!
But, where will the money come from? From your paycheck? Leftover disposable income? Grandparents? A GoFundMe account? And, where do you save?
The Money Architects at Vivensure® will evaluate your family’s current financial situation, then develop a proposed plan that will address college savings, debt elimination, and your prospective retirement. The plan, however, will not include 529 Plans, Roth IRAs, UTMMAs, UGMAs, or Coverdell Savings Accounts. It will include a financial vehicle with guarantees – guaranteed growth, guaranteed protection against loss, and guaranteed tax-free use of the funds.
Learn more by scheduling a meeting with a Money Architect at Vivensure®!