Tips for Starting a College Fund in Georgia

Your kids work hard at school and deserve the best possible start in life. The thought of paying all or some of their college expenses can be daunting, though. In 2012, four years at a university cost anywhere from $30,000 on up to $150,000 or more.

Where do I start?

A 529 plan is a tax-advantaged investment plan specifically set up for people (parents, grandparents, relatives, friends) to save for a child’s future education. Any money you invest in a 529 plan is tax-free. Withdrawals are as well, as long as the money goes toward college. 529s also do not affect your family’s eligibility for federal financial aid, whereas investments in a Roth IRA might.

There are two types of 529 plans: prepaid and savings. Prepaid plans are currently offered by 11 states, and unfortunately Georgia isn’t currently one of them. Georgia does offer a 529 savings plan, in which money invested into it will grow based on market performance.

The Georgia Path2College 529 plan offers two different age-based options that change and become more conservative as the recipient grows closer to college age. They also offer five different fixed options, in which you can invest in one of three mutual-fund portfolios or the TIAA-CREF Life Insurance Company.

Are there other ways to pay for college?

Absolutely. In addition to a prepaid college fund, your child can help offset the cost of college with scholarships, grants, student loans, and a part-time job. It’s often not one thing, but a combination of them, that will help to fund your child’s education.

How far does the parents’ responsibility extend?

In short, that decision is 100% yours. Is it nice to contribute to your child or children’s college funds? Absolutely. Is it required? No. If the family’s budget is stretched as tight as it possibly can be, maybe this year isn’t the year to open a 529. If you can spare a little here and there, though, even small contributions will grow over time.

Overall, possibly the most important thing to remember is to set a goal and stick with it – just like paying off any loan. That’s the surest way to make a substantial contribution to your child’s education.

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