Saturday, June 11, 2011

The Twelve Week Plan: College

The Goal!

Just had a baby?  It's already time for you to start paying for the little peanut's college education.  How does this apply to the twelve week plan?  I am asking you to research the different college education plans and set up an account within the next twelve weeks.  Don't wait until your child in in middle school, it will be too late to easily fit into your budget.

In Florida we have the Florida Pre-paid Tuition Plan.  Many states have similar plans in which you pay for your child's tuition at today's prices rather than future, higher prices.  In these plans you can invest monthly or make a lump sum payment at the beginning.  Considering the rapid pace with which college tuitions are rising, I think that these plans can be a very good deal.  The downside is if your child decides to attend a private college.  You do get your money back, but without a good return on your investment.

The other is the 529 fund plan.  Each state has a 529 plan, but you can invest your money in any state's plan.  This is a state or educational institute sponsored plan that comes with tax benefits.  Many different financial institutions are involved in these plans.  Go to to see a detailed breakdown of the different plans and a more detailed explanation.  I chose Nevada's USAA 529 plan for my daughter even though we live in Florida.

If you do set up at 529 plan, be sure to have a direct deposit set up.  This is also a great opportunity to have your child put aside some of their money to invest.  Your children will have a deeper appreciation of the fund if they have directly contributed.

God bless,

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