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College Planning

College Savings Plans & Options | Detroit Michigan College Planning

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Financial Planning for College

College Planning & Saving

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Links Of Interest

College Board

Information on financial aid, SAT test registration and preparation tips, college selection, applications, and trends in costs and savings.

EFC Calculator

Use this 2012-13 School Year Expected Family Contribution (EFC) Calculator to estimate how much the student’s family will be expected to contribute and gain insight into the student’s financial aid eligibility.

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All you ever waned to know about financial aid.

FAFSA (Free Application for Federal Student Aid)

Official website for federal student aid information. Complete a FAFSA or FAFSA4caster to determine eligibility.




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Plan Today for a Bright Future Tomorrow

Although it is best to start the college investment process when your child is young, it is never too late to begin. No matter your child’s age, what’s important is that you plan now. It is easy to put off thinking about these expenses, hoping that your child will receive scholarships or financial aid. But don’t count on them. While these awards do help with college funding, they are not guaranteed, not always comprehensive and not available to everyone. Comprehensive financial planning is essential.

Your child’s education is important to you. And because of that, it’s also important to us. Our financial advisors listen to your objectives and provide personalized solutions to help you reach them. By putting your investment needs first, we can help you properly plan for a bright future.

The time to plan for your child’s future is today. Contact us for a no-obligation analysis of your college planning alternatives. Please take a look below at the various college savings vehicles available to you, or click here for additional comparisons. We have included important links to information on financial aid and financial aid eligibility at the bottom of this page. 

College Planning Options

These state-sponsored plans offer flexible, tax-deferred ways to save.

Benefits

529 savings plans offer several advantages over other savings plans.

  • States may allow contribution deductions from state income taxes.
  • Earnings are free from federal taxes if used for qualified higher education expenses.
  • In most states, earnings are free from state taxes if used for qualified higher education expenses
  • You – rather than your child – remain in control of the funds.
  • Generous contribution limits exist, regardless of income level.
  • You choose the investment strategy that is right for you and your student.
  • You can contribute to a 529 savings plan and a Coverdell Education Savings Account during the same year.
  • Your child may choose any accredited college, university or vocational school.
  • Unused portions of the account may be transferred to another family member.
  • Contributions are typically excluded from your taxable estate and may not be subject to gift taxes.

Other Considerations

While 529 savings plans offer many benefits, there are potential drawbacks.

  • Earnings are taxed and subject to a 10% penalty when withdrawn for uses other than qualified higher education expenses.
  • The portfolio allocations may only be changed once per year or upon a change in beneficiary. 

These plans allow you to purchase a certain percentage of tuition over time that is guaranteed to be equivalent to the same percentage of tuition in the future. We can assist you in determining if a 529 prepaid plan is available in your state.

Benefits

With tuition rates rising, these plans may be appropriate for some families.

  • States may allow contribution deductions from state income taxes.
  • Earnings are free from federal taxes if used for qualified higher education expenses.
  • Returns are tied to state school tuition increases.
  • Funds are not subject to market volatility.

Other Considerations

Consider these plans carefully since there are limitations.

  • Earnings are taxed and typically penalties will ap­ply if the funds are not used for higher education.
  • Your child may have limited school choices. 

This act allows you to transfer ownership of assets to your child without needing to establish a more costly trust.

Benefits

While not specifically designed for educational funding, these accounts can be advantageous as they allow you to accumulate funds in your child’s name.

  • Earnings from these investments may be taxed at your child’s lower rate.
  • There are no annual contribution limits, but gifts of more than $13,000 may trigger the gift tax.
  • Transferring assets may lower the value of your portfolio, thus allowing you to avoid higher taxes.
  • You may invest the funds on behalf of your child, but higher-risk investments are prohibit­ed. We can provide you investment advice that suits your goals for your child.

Other Considerations

These accounts are not specific college savings plans, and there are several noteworthy issues to think about.

  • You lose control of the funds when the child reaches the age of majority.
  • Contributions to the account are irrevocable.
  • Your child may use the funds for any purpose. 

Formerly known as the “Education IRA,” this savings alternative is a trust or custodial account used for education expenses.

Benefits

Coverdell Education Savings Accounts (ESAs) offer several advantages.

  • Earnings are free from federal taxes when withdrawn for qualified education expenses.
  • Unlike most other education savings accounts, funds can be used for primary and secondary education in addition to higher education.
  • You can contribute to a Coverdell Education Savings Account and a 529 savings plan during the same year.
  • You have full investment control.
  • Unused portions of the account may be transferred to another family member.

Other Considerations

Before investing in a Coverdell Education Savings Account, consider these points.

  • Total contributions are limited to $2,000 per year.
  • Earnings are taxed and subject to a 10% penalty if not used for qualified primary, secondary or higher education purposes.
  • Income limitations may prohibit some individuals from contributing. 

You can withdraw funds from your IRA to pay qualified higher education expenses. While this may seem like a viable savings option, remember that you will be spending your retirement savings. In addition, amounts withdrawn may count as income and affect eligibility for need-based financial aid.

The 10% penalty tax for withdrawals is waived when funds are used for higher education purposes, but the money may still be subject to income taxes.

Typically, if you own a traditional IRA, the full amount will be taxed, while Roth IRAs allow tax-free withdrawals in certain circumstances. Discuss this issue with us to determine if your withdrawal will be subject to taxation.

While the main purpose of life insurance is to pro­vide money to your family after your death, it can also be used to fund higher education expenses. While it is inappropriate to buy a policy for the sole purpose of college savings, the cash value of your whole, variable or universal policy can be used to pay for such expenses. Talk to us for specific guidelines before withdrawing funds, and remember that life insurance is not a college savings plan by nature. Other alternatives can better help you save for these expenses..

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.

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