College Savings Plans
Next to your home, a college education is the largest purchase your family will probably make. While saving for it now may seem impossible, given the current demands on your budget, having even a portion of the needed funds set aside will be a tremendous help when your children reach college age.

The first step
Before you can determine what type of savings plan you need to develop—and how much you need to save each month—you need to find out how much your costs will be at the time your child enters college. Consult with an experienced financial advisor who can help you determine how much your costs will be and ways to accrue the needed amount.

Variables that will affect your plan
The ultimate plan will depend on a variety of factors such as:

• The number of years until college begins;
• The amount of money available to invest
• Your family’s income tax bracket;
• Your tolerance for risk;
• Your investment experience.

Approaches to saving
Some of the more traditional savings vehicles used may include savings accounts, tax-free municipal bonds, or long term investment vehicles. There are also a number of strategies that provide tax advantages, such as 529 college savings plans, Education IRAs, savings bonds, baccalaureate bonds (a special form of tax-exempt municipal bond) and qualified state tuition plans.

Understanding important issues
One of the concerns that may arise is: Who owns the funds—the parents or the child? This is much more than a control issue because it involves income and gift tax issues that could impact your child’s future ability to receive financial aid. Because of these and other tax issues, it is extremely important that you seek professional financial planning or tax advice before implementing a plan.