Personal Finance

Funding the Cost of College Checklist

As the cost of college continues to rise, proper financial planning is essential to saving enough—in a way that best suits your circumstances—to fund the cost of higher education. If you have a child, grandchild, or multiple children considering a college education, here are some key considerations to address in order to ensure you are on track to meet your education savings goals.

If you are a parent...
Balance multiple financial goals and prioritize effectively
Protect your retirement nest egg: Balance retirement and education savings without compromising one or the other.
Make a list and check it twice: Create a comprehensive list of any and all of your short- and long-term financial goals to help you determine your top priorities and ensure your timelines are synchronized and realistic.
Dial in on the details
Establish your timeline: Approximately how many years do you have until your student starts college? What is your target retirement date?
What are the student’s education goals? Public or private? Two-year or four-year? How many college bound children do you have?
Consider your saving solutions and options
Consider other contributors: Will anyone else be contributing (i.e., grandparents, the student, other family members)? Will the student be eligible to apply for/obtain any merit scholarships?
Figuring out Financial Aid: Learn how the treatment of your assets can affect your financial aid eligibility.
Take advantage of tax-efficient savings vehicles: 529 Plan, UTMA/UGMA, Investment Accounts, Life Insurance, and Roth IRAs are some of the options you may consider when saving for education costs. What’s the best option for you?

If you are a grandparent...
Balance multiple financial goals and prioritize effectively
• Determine your funding goal or preference: How much would you like or are you able to contribute (i.e., a percentage of the tuition cost, a dollar amount of your choosing, whatever you are able, etc.)?
• Establish your timeline: When will the student begin college?
• Don’t derail your retirement income: Ensure your retirement income strategy and stream will stay on track, then determine your education funding capabilities.
Understand gifting rules to make the most of your contributions
• Be tax-efficient: Use the gift tax limits and regulations to your advantage when contributing toward education costs for a grandchild.
•Make the most of your gifts: Be strategic about your education funding contributions so that both the giver and the receiver can reap the benefits of smart gifting.
Utilize effective estate planning strategies
• Protect your estate: Consider estate planning strategies that can work in conjunction with education funding or gifting contributions.

Janney Montgomery Scott LLC, its affiliates, and its employees are not in the business of providing tax, regulatory, accounting, or legal advice. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any taxpayer for the purpose of avoiding tax penalties. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

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