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Saving for College – Which Option is Right for You and Your Family?

I did not attend college the traditional way.

My family and I immigrated to the US from Iran when I was twelve, and while I had a solid middle-class upbringing when in Iran, neither one of my parents had gone to college. My dad was a small business owner and my mom stayed home with my brother and me. As an immigrant to the US with only my mom here to support my brother and me, we did not have the right guidance or the financial means for me to go to college after high school.

When we moved to the US, my mother enrolled us in public school. We had distant relatives that were not as supportive as we had hoped and accordingly, we dealt with financial difficulties because my dad could not relocate to the US. For many years my family operated in survival mode, which meant focusing on immediate needs: food, shelter, work and money.

As I grew older, I saw school as a waste of my time and talents and took the GED and began working a professional job at 16. College never even entered my mind.How to save for college

Fast forward twenty plus years – I met my now husband and moved to Vermont. It wasn’t until after I got married and we talked about starting a family that I thought about getting a degree. Not having a degree had never stopped me from excelling in my career but there was something about having a child that made me want to set a good example.

My husband and I were fortunate that we could self-fund the cost of tuition for my business degree from Champlain College and I met my goal of graduating before my daughter started kindergarten. In fact, one of the happiest moments of my life is having her cheer me on when I was walking in the graduating class line!

As parents, we always want our children to have better experiences than we did. I am ensuring that my daughter has the opportunities that I never had by making sure that she has the means to go to college the traditional way. Saving for college now is a part of that plan.

Are you saving for college for your kids? Do you know how to start? Are you looking to get your own degree? Here is some information to help you get started:

  1. First, decide what the type of account you will be opening and how much money you will need to open this type of account. There are great college savings calculators online that will calculate to the penny how much you will need to send your child to college. You can choose options such as public school, private, or your contribution to the total, and factor in any current savings. Don’t get discouraged if you are not able to contribute as much as the calculators indicate you need. Studies show that saving any amount will increase the likelihood of a child attending college.
  2. Then choose your savings vehicle. There are several ways for families to save for college for their children. I have outlined them below (adapted from a Vanguard article):
Benefit 529 College Savings Accounts

(Vermont Higher Education Investment Plan)   

General Investment Account Education Savings Account (ESA)  
State tax break                         X    
Federal tax break                         X                    X
Low financial aid impact                         X             X                  X
High contribution limits                          X             X  
Earning potential                         X             X                   X
Access to your money                          X              X                   X
Aged based options                           X    
Total flexibility               X  
Account control                           X             X                   X 

The 529 plan offers the most benefits but does not give you complete flexibility. This is an important consideration if your child decides not to attend college. The Education Savings Account offers similar tax and earning potential benefits but lacks the State tax break. These plans can be opened through any bank, credit union, mutual fund company, or brokerage firm. While a general investment acsteps for saving for collegecount allows the most flexibility, it lacks tax break benefits

It’s also important to note that college savings plans are not just for kids. If you are like me and are going to school as an adult or have plans to do so, it might make sense to open a college savings account for yourself and take advantage of the tax breaks.

We started saving for college the day my daughter came home! We have always told her that she is going to college. We don’t view it as a choice, but as the next natural step after high school. Fortunately, we are doing what we can to prepare her for that next step when she is ready!

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