Ask an Advisor About College Savings

Ask an Advisor About College Savings

Summer break is coming to an end and another school year is upon us. Stores are filled with back to school supplies and clothes and shoe shopping is in full swing. Social media will soon be filled with 1st day of school pictures. 

What does the milestone of another school year mean to your financial plan? If you plan on helping your child pay for college, it means you are 1 more year closer to college. If you don’t have a plan, it’s time to look into one. If you have a plan, it’s time to evaluate whether or not you are on track.   

When should I start saving?

Short Answer: the earlier the better!

The earlier you start saving, the more time your money has to grow – the magic of compounding! While, the benefits of early savings are dramatic, it’s never too late to start. Those dollars will not have as long to grow, but every dollar saved is a dollar that is not borrowed! 

It is important that you do not forgo saving for your own retirement in order to increase savings for your child’s college.  Keep in mind the fact that your child can get a loan for college but you cannot get a loan for retirement.

What types of accounts should I consider when saving for college?

Technically, any savings or investment account (outside of a retirement account) can be used. If you plan to use the funds solely for college expenses, a 529 plan offers the most tax benefits for your funds. Other options to consider are Pre-paid Tuition, an UGMA account, savings accounts, and investment accounts. 

There are pro’s and con’s to each of these accounts and you need to determine which type of account best fits your needs. It is important to understand and compare the yearly contribution maximums, tax benefits and the withdrawal restrictions    

What is a 529 Plan?

529 plans are among the most commonly used college savings vehicle.  Invested funds can grow free from federal taxes and many states offer a state tax deduction or tax credit on contributions up to a certain amount. These tax benefits make 529 plans a more popular choice over traditional savings or investment accounts.  In addition, these accounts can be set up for anyone and can change the beneficiary to another family member without penalty. 

The best way to save for college looks different for each family, but 1 truth remains: it’s never too early to start. 

Rose M. Price CFP®, AIF®

Rose Price is a Financial Advisor at VLP Financial Advisors. For more than 30 years, VLP has worked successfully and effectively with all kinds of families and individuals, retirees and business owners, women and men—all pursuing their own aspirations, each investing and saving in the ways that make the most sense for them. We’ve stood with those clients through life transitions, through celebrations and challenges, through milestones and market swings. We look forward to standing with you.


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Investment advisor representatives offering securities & advisory services through Cetera Advisor Networks LLC, a broker dealer and Registered Investment Advisor, member FINRA/SPIC. Cetera is under separate ownership from any other named entity. 

*All situations are different, please consult your financial professional for information regarding your needs and suitability issues. An investor should consider the investment objectives, risks and charges and expenses associated with municipal fund securities(529 Plans) before investing. More information about municipal securities is available in the issuer’s official statement. The official statement should be read carefully before investing. For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice.

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