parents saving for college?

Question

What's the best way for parents to save for college for year-old twins? Parents' income is high $40's. Don't want to end up having available financial aid cut because they've saved. How does the formula work? I know it's a long way off and rules can and probably will change - but how does it work now?

Any comments on such savings vehicles as 529 plans or UGMA accounts?

Other question - if grandparents want to put money away for the kids' college, what's the best way to do that so it doesn't just end up causing any financial aid to be cut? Families aren't rich, but aren't low income either. With two in school at the same time, finances will be..... interesting.

Answer 1

Prepaid tuition plans are not reportable on the FAFSA. The financial aid office does not decrease other aid (except loans) for the inclusion of tuition plans.

If the Education Trust is in the grand-parents name, it is not reportable on the FAFSA. If it's in the parent's name, it is reportable as a parental asset....not just the one for the student, but all ETs in the parent's name. If it's in the student's name, it is treated as a student asset which has a greater impact on the student's financial aid eligibility.

Hope this information helps in making your decisions.

Answer 2

The best plan right now is either a prepaid college plan offered by your state or 529 plan. However, at the moment contributions are tax deductible on the federal tax return until 2010. Some plans start with as little as $25 a payment. In combination with Upromise and your contributions based on what you can afford per month, it can grow in some cases pretty high. Upromise will let you contribute 4 times a year into your 529 plan, and it is based on purchases. Both are free to join. I recommend placing part of any money gifts into the 529 plan, too. I have included some further readings on the subject.

Answer 3

Judy you ugly cow