As a college solutions specialist with College Funding and Planning in Overland Park, Kansas, Michael Berlau assists families with applying to and paying for college. Michael Berlau draws on a detailed knowledge of college savings vehicles to help families determine the best way of making education both affordable and tax-efficient.
For families who expect to be sending a child or children to college, the 529 plan serves as a tax-advantaged savings vehicle. The plan is available to any US resident or citizen who is 18 years of age or older and is most often used to save for a younger child's education, although it is possible for the account holder to save for his or her own college costs as well.
Each US state and the District of Columbia sponsors at least one 529 plan, while a large number of institutions have their own prepaid tuition plans. The prepaid plans allow an account holder to purchase tuition or fee credits at current prices, to be used in the future. Most such plans feature state sponsors and some may be guaranteed by state governments, though some do not offer a guarantee.
College savings plans also feature sponsorship by the state and are not backed by state guarantees. These plans take contributions from the account holder and place them into investment vehicles, most often chosen by the saver. There are also a number of plans that channel assets into static funds or select investment vehicles based on the beneficiary's age, so that investments become more conservative as the beneficiary moves toward college age.
Like prepaid plans, college savings plans feature state sponsorship but do not guarantee contributions. However, investments in protected bank products may include FDIC insurance.
