Our financial advisors can help you determine which college savings plan or other investment vehicles are best for your education goals.
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Whether you’re an advanced investor or just starting out, we’re here to help.
At Midland Wealth Management, we know how essential education is. We work hard to help you strategize ways to save for your loved one’s education without taking the focus off saving for retirement. Our credentialed, fiduciary financial advisors give expert, unbiased advice for education savings strategies that are tailored toward your needs and goals.
Working with a financial advisor on your education savings strategy can help maximize earnings so you’re contributing the proper amount and using the type of account that’s best suited for your education savings goals. Our financial advisors are experienced with different investment vehicles for education, including:
These are tax-advantaged accounts where parents can contribute after-tax dollars to save for a child’s education. Contributions grow tax-free while in the account and are tax deductible in dozens of states, including Illinois and Missouri. Money withdrawn from the account for qualified education-related expenses is tax-free as well.
These custodial accounts are available through the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA). Both allow for the transfer of assets to a minor with the general benefit of being able to take advantage of the child’s lower tax rate. The assets do not have to be used for education specifically and may even hinder the ability to get financial aid.
These individual retirement accounts that are funded by after-tax dollars are not traditionally considered a college savings account but contributions can be withdrawn penalty-free for qualified higher education expenses. Earnings that are withdrawn will be subject to taxes.
An educational trust can be set-up with terms that indicate what assets can and cannot be used for. This can be a popular option for parents or grandparents looking to transfer assets out of their estate for tax reasons.
The cost of tuition can vary significantly, but a common rule of thumb is to save 50% for college education. If you start saving early enough, you can maximize the benefits of compound growth and interest. The remaining 50% can come from financial aid, grants and scholarships, student loans, and more.
Do not despair. There are plenty of college savings options if you are getting a late start. Prepaid tuition plans, 529 education savings plans, Upromise accounts, and scholarships are a start. Encourage AP courses in high school that can earn college credit hours, reducing overall tuition. Research nearby community colleges that could cover the first two years of schooling at reduced tuition plus a bonus save on room and board.
The money in 529 accounts is versatile. The beneficiary can use it for most educational purposes as approved by the account owner, including:
At Midland Wealth Management, our goal is to get you on the path to financial freedom. For years, we've worked with individuals, businesses, and corporations to get their finances in order so they can get the most out of their money. Having a college savings plan is just one step toward developing a solid financial strategy that anticipates what comes next.
Get in touch with one of Midland Wealth Management’s trusted financial advisors and we'll make sure you understand the type of investment and savings accounts available to you.
