Nobody can certainly predict the future. It is only prudent that anyone stayed prepared for its outcomes by laying out robust plans and taking out every advice from financial experts. Higher learning is a very costly affair, and it can be financially breaking especially for the unprepared. In most instances it seriously drains families of their resources, leaving them heavily in debt. It is a dream of any responsible parent out there to have his or her children attain higher education and get ready for the life ahead.
Early preparations for this chapter of life is really important as the earlier one prepares, the better. The little contributions made over specific periods of time are extremely significant in ensuring that a parent saves enough money needed for tuition at the college level. The contribution accounts are normally tailor-made to suit the income levels of every individual, making it a hassle free affair to make contributions towards the future education of the beneficiary. Even the unemployed can have such accounts, and the contributors can choose the amount that they wish to be deducted after a specific period to say for example monthly, weekly or after every fortnight.
Another benefit of having an education saving plan is that the contributions are not subject to tax after withdrawal. This is unlike other savings models such as mutual funds which are subject to capital gain taxes and other forms of federal taxes. Contributors can be rest assured that all the sums saved over specific periods can be withdrawn without having to pay a single cent to tax agencies.
Another advantage of having an education savings plan is that contributions are capped at really high levels. For instance, one can save even an excess of $300,000 on the contributions accounts with some instances of up to 500,000 dollars!
The contribution account does not affect the legibility of the beneficiary accessing state-sponsored funding regardless of how much is saved. The contributions are treated as the contributor’s money and not as beneficiary’s money. To add to this, the beneficiary can go ahead and be granted any other form of sponsorship or funding for his or her education.
Anybody can make contributions towards the savings plan. Friends, families and even the employer can choose to make contributions towards saving for the tuition of the beneficiary. Contributors are not limited to specific persons.
A good thing is that these savings accounts earn interest on savings. Usually, the money saved is taken and invested in profit bearing securities such as bonds and stocks. The money saved gets to enjoy fixed interest incomes, and when this is compounded over a specific period of time, it becomes a substantial amount. Not only do you get to pay for college hassle free but also your money grows as well.
The money is easily transferrable from one state to another whichever state a child chooses to attend college. Also, the money can easily be transferable from one family member to the next in case for one reason, or another beneficiary does not attend college.
Sometimes, although not intended for the purpose, the money can be used to boost a financial need in the latter future. A child may fail to qualify for college, or he or she may find an alternative option of paying for college such as landing a good scholarship or getting a state sponsorship. This money can be withdrawn, although at a taxable charge of 10%.This amount can be used to offset a debt or do any other useful activities.
Knowledge First Financial can help relieve the young ones of the burdens associated with debt. Usually, the higher education loans attract quite a huge interest, and they can prove to be quite a financial burden to the kids in future. With a savings plan that will help cater for their education, your children can be relieved of some debt in the future.
An education saving plan can go a long way in saving the financial headaches associated with the really high tuition costs which are not only on a steady increase but also often out of reach for many parents. They can also make a good savings vehicle for a really uncertain future as times are really never predictable.