LANSING Mich. (WLNS) – As students return to campus, new parents may be thinking about their child’s college funds.
Are you one of those parents?
Local money expert Stephen Schiestel has some tips on how to save for college.
“When you think about college savings, the first thing that we really want to do is to have a plan. Obviously having this plan and having it set up and discussed earlier is better because time allows us to look at all the different options that might work best. Obviously, the funding requirements of a community college or a community college to a four-year,” said Schiestel.
Colleges and Ivy league schools are obviously going to have different types of funding needs that the family unit will have to come up.
How do we pay for this?
There are options that are available.
The first would be probably the most preferable, which would be grants and scholarships.
Next would be student loans.
The money there can roll out tax-free. If you use the plan in the state that you reside. So an example for state residents here, If we use the Michigan plan, we can also qualify for Michigan tax deductions on our contributions.
Another option would be the Coverdell IRA, which is very similar to an IRA in the sense that monies are going in up to $6,000 a year, the money can grow tax-free. If they are used for education expenses, they can be paid for on a tax-free basis.
We also have Michigan education trust, which are pre-funded only for Michigan schools.