In a recent Wall Street Journal article, How 529s Affect Financial Aid, I answer some questions that readers have about their 529s, such as what to do about leftover 529 funds and whether a summer college program for rising juniors would count as an allowable expense.
You can read the article if either of those questions interest you, but the important thing to keep in mind is that using different financial tools to pay for college is complicated. For example, even though both an UTMA and a 529 can be used to save for college, an UTMA is treated very differently than a 529 in how it impacts your financial aid calculations.
Any families that are saving a significant amount of money for college can benefit from professional guidance. While I often talk about your choice of schools having the biggest impact on how much you pay for college, your savings vehicles have a big impact as well.
Proper planning helps you maximize the amount of financial aid your student receives and maximize the “tax scholarships” you can get by saving money for college in a savvy way. And while you can learn a lot of this on your own by reading books like Never Pay Retail for College, it can quickly become very complicated for families with higher net worths.
The best time to start thinking about the specifics of how you will save for and pay for college is prior to your child’s sophomore year of high school. And If you want to start saving early, it is a good idea to talk with an advisor before you set up a 529 plan or similar vehicle. A little guidance could save you thousands of dollars when paying for college.
If you would like some help figuring out the best way to plan for and pay for college, you can schedule a free consultation.