what is the best way for savings for childrens college? What is the 529 plan? Whaich 529 plan is best?

Answer 1

From a Financial Aid perspective, 529 savings plans will get you the most bang for your buck. They're incredible college savings tools (a) because the distributions are tax-free and (b) because of the way they are treated when a student applies for Financial Aid at the college of their choice.

So, why is a 529 savings plan better (from a Financial Aid perspective) than, say, a savings account, a share of stock, or setting up a trust fund? Well, as you may know, the federal Financial Aid application (FAFSA -- http://www.fafsa.ed.gov ) asks a variety of questions about the family's income/assets as well AND about the student's income/assets. The aim of the form is to ascertain a family's ability to pay for college by calculating what we refer to as an EFC or "Expected Family Contribution." However, different items on the application are weighted differently: for example, income and assets in the student's name are weighted more heavily than income and assets in the *parent's* name. So, if one of your children had $10,000 in a savings account, this money would be "held against him/her" much more than if that same $10,000 was in *your* name. Now, although the student is the beneficiary of the money from a 529 savings plans, the Dept. of Ed. has deemed that 529 Plans are considered assets of the *parent*. This means that these assets are "sheltered" significantly more than other assets of which your son would be the beneficiary (for example, a trust fund). Even better: in some cases, an asset in the parents' name might not even count against you at all (depending on your age and the value of that asset).

As for which 529 is best... here's a nifty site that will help you compare different plans: http://www.savingforcollege.com/compare_529_plans/

Answer 2

529's are nice but like our concern is if our kids do not attend U of Miami. How easily will the money actually be moved. What they claim now may not be the case in 4 and 6 years. Put more in good dividend paying companies and that will help offset and future problems. Remember, dont put all your eggs in one basket.