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How to Save for Your Children's College Education While You're Still Paying for Yours

April 16, 2012 | Comments: 0 | Views: 173

One of the biggest fears of our clients with children is that they will still be paying off their own student loans when it's time to start paying for their kids to go to college.

If you use what I'm about to teach you, you can be a hero to your kids by pre-funding their college education and at the same time relieve your stress by paying down your own student loans faster. If you don't use what I'm about to teach you, you could end up living every parent's worst college nightmare, the 11th hour crisis to find the money for college as they struggle to pay back their own student loans.

Common sense tells us that the more goals we are saving for the less we can contribute to each goal. For example, if you have $1,000 each month to put toward your financial goals and you have 10 goals in total, that equals $100 allocated toward each goal right? And if you only have 2 goals you can now save $500 toward each goal. Pretty simple stuff here but the point is, there's only so much money to go around unless you start thinking outside of the box. As you know, the real problem is that student loan debt payments take up such a large portion of your monthly income that there's a big challenge in finding the money to pay bills, loans, housing expenses, save for your retirement and college for your kids. As a result, most families end up sacrificing one or several goals in order to meet others.

There is help, and it's closer than you think

What if you could get friends and family to help you build your children's college fund? Grandparents, aunts and uncles, cousins, brothers and sisters, even friends and colleagues, anyone you know can help build the account. All you need are two things to get started: a 529 college savings plan and a 529 plan registry.

The 529 plan

State sponsored college savings plans or 529 plans are named after the section of the tax code that provides for their favorable tax treatment. The 529 plan is an investment account that was designed to help pay for future qualified education expenses including tuition, books, supplies, equipment, and room and board.

There are lots of benefits to using a 529 plan for college savings among them are:

1. Tax benefits - Money going into the plan is after-tax but earnings accrue tax-deferred and distributions made to pay the beneficiaries college costs are federal tax-free. Some states also offer similar tax benefits. Added bonus; there is no tax reporting until the year in which you began taking withdrawals.

2. You retain control of the funds - With very few exceptions, the beneficiary has no rights to the funds. You own the account and you decide when withdrawals are taken and for what purpose. This helps you avoid the Harley versus Harvard dilemma where your kid decides he would rather buy a Harley and see the country than spend four years at Harvard. And if the Harley versus Harvard dilemma does come up you can always change the beneficiary of the account to another child or even yourself if you plan to further your own education.

3. Easy to manage - Once you decide which plan to use, fill out the enrollment paperwork, and make your contributions, the professional managers take over and handle the day-to-day management of the investments for you.

4. Flexible - In most programs you can change investment options, roll over into a different state's plan, or change beneficiaries. You have many options to make sure that the plan remains the best fit for you and your children.

5. Large deposits are allowed - In many state plans contributions of up to $300,000 are permitted.

The 529 plan registry: supercharging your 529 plan

The control, tax benefits, and flexibility of 529 plans are great but if you really want to supercharge the value of the 529 plan, you need to get others to help you fund it and that's where the 529 plan registry comes in.

Once you enroll in a 529 plan you can go to a 529 plan registry website like that connects friends and family with your child's college fund. A 529 plan registry is similar to a gift registry that you may be familiar with from weddings and baby showers. Here you can sign up and connect with friends and family who can go to a personalized registry page to make a gift donation for your child's college education fund.

There are lots of benefits to using a 529 plan registry for college savings, here are some of the benefits of Freshman Fund:

1. You get a customized webpage - Where friends and family can go to make donations at anytime.

2. The account is free to set up - However, contributions are assessed a small service charge.

3. It's easy to share and get the word out - You have the option of importing your Yahoo, Gmail, Linkedin, or other address book contact information so you can notify those people in your network who might be interested in helping you fund your children's college education.

4. Your children's privacy is protected - Privacy is a big issue and Freshman Fund has a detailed privacy policy that you can view. You have the option to restrict who can view your child's pages and limit viewing only to signed-in users and not the entire internet. And unlike Facebook, if you ever decide to completely delete your child's profile, you can do so.

How do you get started?

The best part is that you can get started in four simple steps:

1. Visit: and select a 529 plan - Here you will be able to get all of your college savings questions answered and select which 529 plan is best for you.

2. Enroll in the 529 plan you have selected - Complete the enrollment process.

3. Visit: - And Sign-up.

4. Get the word out - Use the tools on Freshman Fund's website to customize your friend and family greetings and invite them to help you build a strong financial foundation for your children's future education. Be creative and have fun. There are many ways to share this news, birthdays, holidays, special events, the more you can engage your network the more savings will pour in.

Before you close this article

Momentum is important, at the very minimum go to and bookmark the page so you don't forget. If you have a few minutes, poke around on the site a bit to see what's there. And if you're a real go getter select a 529 plan and get started building your college fund right now.

Visit to claim your free report "The 3 Biggest Mistakes College Grads Make When Trying to Pay-Off Enormous Student Loan Debts...And How to Avoid Them".

Source: EzineArticles
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