What Is The Best Way To Save For College? – Part I of 2
Have you ever wondered about the best way to save for college for your child or grandchild? If so, keep reading. The most important advice I can provide is that no matter what you do, start saving as early as possible and as much as you can afford. The sooner you start the more money will be available for college.
The 2 plans that receive the most attention are the 529 College Savings Plan and the Florida Prepaid College Plan. There are many differences between the 2 plans. I am going to outline the Florida prepaid plan this week and will outline the features, advantages, and benefits of the 529 Plan next week.
The Florida Prepaid College Plan
This plan enables you to pay for tomorrow’s tuition at today’s prices. Essentially you are paying for tomorrow’s education today and at a discount. This type of plan offers peace of mind by locking in the tuition rate. The money is invested by the plan administrator to try and provide a hedge against college tuition inflation. You can make a one-time payment or a recurring payment depending on your financial situation. The Florida prepaid will guarantee the cost of tuition at a Florida college.
There are a total of 28 Florida colleges in the program and 12 Universities. The colleges offer lower tuition and fees, and the State Universities offer the widest variety of bachelor’s and graduate degree programs.
Open enrollment runs from Feb 1st through April 30th. Assuming you have a newborn and want to set up a 4-year college plan, the current cost would be $115.90 per month. This will provide 120 college hours. This is the cost of a bachelor’s degree from a state college. The cost for the same newborn for a state university according to the Florida prepaid site would be $180.51 per month. The base plan does NOT cover room and board. However, a dormitory plan can be added for an additional cost.
A popular way of funding this plan is a gift from the grandparents. The grandparents can pay the cost upfront if they have the means to do so. This would create a gift tax upon funding. The advantage to this strategy is that it would lower the estate of the grandparent and provide a wonderful benefit for the grandchild while saving the parents money. Please check with your accountant for gift tax considerations.
For more information on the state plan, please visit; www.myfloridaprepaid.com/prepaid-plans/plans-and-pricing.
Should you wish to discuss this in further detail, please call us at 305-670-7088.