It has become commonplace for Americans to hold a degree from a higher education institution which is great for the future of the national economy, but what does it spell out for personal finances?
When you or a dependent have a solid financial plan before starting post-secondary education, there is a better chance of being able to manage much dreaded “post-college debt.”
Save Early, Save Often
It seems like a simple concept, but many don’t realize until it’s too late. By saving early and depositing a steady amount of wealth into a high-yield account, you’ll be able to budget both for the present and the future.
Invest In Mutual Funds
Mutual funds are usually low-risk stock groupings you can invest money in to maximize your wealth over time. As an added benefit, a professional, not you, watches the market every day.
There are two tax credits that exist for those paying tuition: the American Opportunity Tax Credit and Lifetime Learning Credit. Up to $4,000 can be claimed with these credits.
529 Savings Plans
Speaking of tax breaks, a 529 savings plan falls into that category. These plans are put in place to allow you to make untaxed withdrawals under certain circumstances. These plans also offer tax breaks so long as you do not exceed $14,000 in contributions per year ($28,000 if contributing with your spouse).
If You’re a Parent, Help Your Child Become More Loan-Eligible
You may need to help your child’s chances in receiving financial aid for college. By saving money in your name, paying of credit cards and car loans, increasing your retirement fund contributions and reducing your available cash, your child will have a better chance at receiving government loans and grants.