Build a Better College Funding Plan

 In 529 Accounts, FInancial Aid, General, High School Students, Planning for College

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Building the best college fund is a huge topic of concern for families. At least once a day David, Teresa, or I are asked, “How should I plan and pay for college?”

Even before I formulate a response, parents will say, “with a 529 account?”. 

Now, as someone who has witnessed the evolution of the 529 account, I cannot recommend its use 100% of the time.   Like any financial product, there are benefits and limitations to its use.  It is not a perfect tool for everyone.

Most people view the 529 account as a college funding strategy, but it is simply a financial product with benefits and limitations. I’ve seen the first hand impacts of said limitations in the form of higher costs for tuition.

Many families, college counselors, and financial advisors need to be educated on the 12 to 15 strategies used to fund college. It is not a one size fits all decision. This is something many families have a difficult time understanding. A plan that works for one family will probably not be the best solution for another. Anyone who tells you a 529 account is bad – or great – isn’t providing the full story. At the very least, they do not fully understand financial planning for college or financial aid. You see, a 529 plan can be a great tool based on a family’s overall college funding strategy. In fact, I recently opened up a 529 account in conjunction with another tool when my son was born.

On the other hand, a 529 can be something that negatively impacts your ability to receive and maximize your aid.

Rather than focus on a product, families should look at four core components before discussing strategies and products. Be sure to ask yourself these questions.

  1. Resource Identification

    • What funds are available to pay the college bill?
    • Are there additional funds I can access (loans, scholarships, tax credits)?
    • How do these resources impact my ability to receive merit money and/or financial aid?
  1. Timing

    • Depending on resources, are they keeping up with college inflation?
    • When is the best time to use these funds? Certain accounts, scholarships and loans are better used at different times.
    • What is the impact on my ability to receive merit money and financial aid in the future?
  1. Accountability

    • Does my student have “skin in the game” or do they expect me (the parent) to pay for college?
    • Does my student understand the cost of attending college or university?
  2. Funding

    • Have I analyzed the 4 year costs of each college my student is applying to in the fall?
    • Have I mapped out my actual 4 year blueprint with which funds, tax scholarships and resources I will use?

Focusing on these categories should be the starting point of your college funding plan. Once understood, you can move on to building strategies that will lower the overall cost and indicate the best financial product.  After that, my answer very well may be… a 529 account!

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Stuart Canzeri
Stuart has been in the financial and college planning arena for a combined 15 years. He received a Bachelor of Arts in Communications from Tulane University, a MBA from Mercer University and completed his Certified Financial Planner certification from the University of Georgia’s Terry School of Business. Sign up to receive tips and tricks for college planning.
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