KEY TAKEAWAYS

  • The cost of college keeps rising each year, so it’s wise for parents and grandparents to start savings plans when kids/grandkids are young.
  • A 529 plan is one of the best, tax-advantaged ways to save for higher education costs.
  • Traditional and Roth IRAs can be used to pay for college expenses, but parents should be sure their retirement needs are covered.
  • Coverdell ESAs allow you to set aside $2,000 per beneficiary per year.
  • Parents and grandparents can set up custodial accounts to fund higher education, but these assets may limit a student’s financial aid.

College costs tend to increase at about two times the rate of inflation each year—a trend that is expected to continue indefinitely. Here’s what you can expect to pay for each year of tuition, fees, and room and board by the time your kids (or grandkids) are ready to head off to college (assuming a steady 6% college cost inflation rate):

Check out the entire article here: Tax-Smart Ways to Help Your Kids/Grandkids Pay for College