Getting College Funding When You’re A Federal Employee
When your children are ready to earn a college education, the subject of college funds will inevitably arise. During that discussion, it’s important that you are able to empower your children to get a good education without going into debt. A college education is expensive, and if inflation keeps up, the price of tuition is going to increase massively. For these reasons alone, saving up for your children’s education is essential to set them up for success. If you’re not certain of where to start, here’s how you can plan for your child’s college education as a federal employee;
Start Planning and Saving Now
It’s never too early or too late to start saving for your kid’s college costs. In fact, the sooner you begin planning, the better – and the less you will need to save in the long-run. Evaluate your budget as soon as possible and determine how much you are able to allocate to your child’s college savings.
Save Often and Regularly
To accumulate enough money to finance four years of college, you must save regularly and aggressively. Instead of saving up an annual lump sum, consider saving up a small amount every month. This will help you take advantage of the compound interest and averaging strategy given that every month counts. Alternatively, you can front-load your child’s account for five years but make sure that the contributions do not exceed the gift tax.
Know the Costs
Planning for college will require you to estimate what the total cost of the college education of your child is likely to be. Keep in mind the factor of inflation and make an estimation based on year by year costs. The numbers are supposed to scare you into action. Make a plan of how you will contribute to the cost and stick to it. If your child has several years before college, it might be time to diversify your savings into growth, and income bond and stock funds. This reduces your exposure to market instability when you want high returns.
Know Your Options
There are several combinations of financing methods and investment vehicles that will help you come up with money for your child’s college education. For the best results, we suggest taking advantage of multiple tax-deferred and tax-deductible methods. Some investment options also include:
- 529 plans
- Roth IRA
- Prepaid tuition plans
- Coverdell Education Savings Account
- UTMA and UGMA accounts
Check Out Our College Funding Guide
Paying for your child’s college education without financial constraints and stress is possible. To get started on this critical journey, consider using our free online tools.
Sign up and download our college funding guide for a great online resource that will help you to understand the steps you can take and the preventative measures you can put in place to give meaning to your child’s future through a college education. In essence, the guide helps you decide what’s right for you and your child. Join WAEPA today and get access to the diverse services and resources.
This article is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.