529 Account For College Needs

Want to get a college degree without burying under the burden of loans? If the answer is Yes then the solution will be a 529 account.

These days, the cost of higher education is a lot higher then what it was in earlier times. Statistics reveal that over the past 3 years the costs of college education have increased at a rate faster than the rate of inflation. This proves that the college education costs are increasing at an alarming rate. Considering this, going to college is a far away dream for people who fall under the low income group. This is a goal which seems to be non-achievable for people who can just manage to meet the ends of their life.

But now there is a way to get a university degree without incurring a huge debt. The possibility is called a 529 account for college savings. Opening a 529 account is the best option if you want to save for higher education of your child. In this 529 plan you have to contribute a particular amount every month and you get the accumulated sum and the interest at the time of taking admission to a college. An added advantage of 529 accounts is that you do not need to pay taxes on capital gain.

There are two options for you if you want a 529 account. These are: * A 529 Prepaid Tuition Plan. * A 529 Qualified Tuition Plan.

Advantages of a 529 account

1. No need to worry about the restrictions of residency. 2. No need to pay federal taxes on the interest gained.

Working of a 529 account

A 529 account works like a prepaid college Tuition fees. This means that you can easily save for your ward's future higher education in advance. You can start paying years before (s)he goes to college. The first step towards this should be a proper research about the investment plan that suits your needs. Though the prepaid plan is restricted to only some selected schools, the 529 college savings plan is more flexible. The education expenses like books, boarding costs, tuition fees, and other school expenditure can be easily met using funds from a 529 account.

In all, a 529 account can prove to be the best bet to finance your child's expensive college education.

529 Comparison