College Planning
Funding a College Education
One of the most important things families want to plan and save
for is their children's education. While this can seem like a
daunting task, you should start planning well before your children
even begin to think about college. An example of the type of
options available is the popular 529 plan. This is a professionally managed,
tax-advantaged way to save for a college education. You can learn more about the 529 plan below.
The first step in planning a college education is to determine
the educational objective. Will your children be attending
a private or a public college? What amount of money will they need
to pay for tuition, books, and living expenses? Depending on the current
age of your child, our Financial Consultants can help you develop a plan
using a combination of special educational savings plans and the different types
of educational loans that are available to finance your child's future education.†††
Benefits
You’ll Receive
Saving for an Education
- A variety of savings options are available
- Some accounts are tax-deferred and offer
tax-free withdrawals for educational purposes
- Beneficiaries may be changed without penalty
- Contributions may be made by any family
member including grandparents, aunties and uncles, cousins,
etc.
Loans for an Education
- Subsidized
loans available to all qualified students based on financial
need
- Unsubsidized
loans are available to all qualified students regardless of
financial need
- Interest on unsubsidized loans is tax-deferred until
graduation
- Parents may apply for a PLUS
loan at a lower interest rate
Saving for an Education
Start early — open savings and investment plans when your child is young. The Our Financial Consultants can help
you by informing you of some of the different tax-advantaged ways to save for your child’s college education:
Section 529 College Savings Plan*
This plan provides the greatest opportunity for saving for your child's education.
Contributions are tied to the gifting exclusion limits — the limit
for 2005 is $11,000. Not only that, but a special rule allows you
to make up to five years worth of contributions (or $55,000) in
one year. The best part is the contributions are tax-deferred and
may be withdrawn income tax-free for qualified educational purposes.
Education IRA (CESA)
A CESA enables parents, grandparents, guardians to save for a child's future
education. Your contributions are not tax-deductible, but all earning
and withdrawals are tax-exempt and free of withdrawal penalties
as long as the withdrawals are made for qualified education expenses.
More
Custodial Account
This account provides a wide variety of investment options and earnings. Up to
certain limits, these accounts are taxed at the child's rate. Withdrawals
may be made for any expenses that benefit the child, not just education
expenses.
College Scholarships and Loans
As your child enters his/her junior year of high school, they will start
the college application process. As they narrow their choice of the
institutions to which they intend to apply, you will then be in a
better position to determine the "gap" between the cost of college
education and the educational savings you have accrued. While your
child begins to investigate scholarship, grant, and work-study opportunities,
you should begin to investigate the loan options that are available
to you to fill the educational funding "gap." Learn more about the
student loan options
American Savings Bank offers.†
Financial Services While Attending College
American Savings Bank also offers financial services for students
while they are attending college. Your child should consider starting
a banking relationship with American Savings Bank by opening a special
Student Checking
package, which includes free online banking, a Visa® Gold Check Card, and more.†
Getting Started
College and post-graduate education is a substantial expense. Our
Financial Consultants will assist you in preparing for this expense. Before you meet with them you should:
- Indicate what type of school you child is planning to attend (private or public) and the projected cost of attending that school
- Identify the number of children you have who are planning to attend college and their age
- Provide details on your financial situation and income
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