Why Education Planning is Important

I’ve personally met with thousands of parents interested in education funding for their college bound or K – 12 children in private schools. In most cases, the timeframe of their child starting school was right at the door, with very little time for effective long-term saving. Without a prior clear plan in place, parents had to absorb overwhelming huge costs which impacted their own retirement planning and savings OR they unavoidably lacked the financial resources for their child(ren) to pursue the educational path of their choice.

Through it all, their common response was (1) wishing they had started early (2) wishing they had useful information on options of how to start planning early and (3) having the financial partners to keep them on track for this education goal. So, taking small steps early can make a world of difference.

Things to Consider for Education Planning

Whether it’s for yourself, child, or grandchild, here are a couple of options to take note of.

Educational Savings Plans (ESPs) and Educational Savings Accounts (ESAs)

  • 529 Plans*: Also called “qualified tuition plans” are state or educational institution-sponsored tax-advantaged savings vehicles meant to encourage individuals and families to save for the future education costs of a beneficiary (child, grandchild)
  • Prepaid Tuition Plans and Educational Savings Plans: These are two types of 529 Plans. Prepaid Plans allow you to save money towards future educational costs, whereby the tuition is locked at today’s rate. Educational Savings Plans are like an investment savings account, but where funds are designated solely for future educational expenses (primarily higher education). Both allow for your savings to tax free IF used for qualified and eligible education expense. Both also have specific guidelines and rules that are sometimes difficult to follow, and you should seek a financial professional and tax professional to help you understand them and to assist with setting them up.
  • Coverdell Education Savings Accounts (Coverdell ESA): These are educational savings that can be built over time using a custodial or trust structure. The sole purpose of such an account is to pay approved educational expenses (elementary, secondary or college) on behalf of a designated beneficiary. You should also seek a financial professional to assist you.
  • Navigating the ESP and ESA landscape: While some ESPs allow you to set up an unlimited number of accounts, not all expenditures from the plans are “qualified” as an education expense – the rules might differ (for example, tax treatment may be different, or income thresholds may exist). Always seek a financial professional and/or tax professional to help you put tax-advantaged strategies in place that are in accordance with their related Federal and State laws.

*529 College Savings Plans
Investors should consider the investment objectives, risks, charges and expenses associated with municipal fund securities before investing. This information is found in the issuer’s official statement and should be read carefully before investing. Investors should also consider whether the investor’s or beneficiary’s home state offers any state tax or other benefits available only from that state’s 529 Plan. Any state-based benefit should be one of many appropriately weighted factors in making an investment decision. The investor should consult their financial or tax advisor before investing in any state’s 529 Plan.

Merit Based Scholarships and Education Awards

As an alternative to student loans and financial aid, Merit-based Scholarships offer hope and opportunity for talented and hardworking students, helping them unlock their full potential and achieve their dreams. On this platform, we aim to shed light on the myriad benefits of these scholarships and highlight organizations with educational scholarship opportunities. Whether you are a student, parent, or an educator interested in scholarships, we invite you to join us on this enlightening journey.

A few valuable insights into merit-based scholarships should do the following:

  • Empower Dreams: Merit-based scholarships empower students to dream big. They should remove financial barriers, allowing deserving individuals to pursue higher education, explore their passions, and reach for the stars.
  • Foster Excellence: These scholarships reward academic and extracurricular achievements, motivating students to strive for excellence in their studies and personal development.
  • Promote Diversity: Merit-based scholarships promote diversity in education by recognizing and supporting students from a wide range of backgrounds, cultures, and experiences.

Want a personalized approach?

Let’s take your Education Planning Blueprint to the Next Level...

Contact Me at The Harris Group Wealth Management