DAVID SCOTT - CONGRESSMAN, REPRESENTING GEORGIA'S 13TH DISTRICT

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Saving for College

Posted by on February 24, 2012

Many seniors in high school are counting the days until they can graduate and start college. However, their parents may be dreading the coming expenses for tuition. The cost of college tuition is increasing faster than the rate of inflation and a lot of families do not want to rack up huge student loan debts. Grants and loans are available to many students. Yet, that assistance may not fully cover education expenses. To help, there are several savings programs and tax breaks to help pay for school.

You can start a "529" college savings plan for as little as $25. Interest earned in the plans grow tax free and withdrawals are not taxed if used for qualified college expenses. In addition, contributions up to $2,000 can be deducted from state income taxes. You can learn more about the Georgia plan at http://www.path2college529.com/index.html

You can save up to $2,000 annually in a Coverdell Education Savings Account. Interest is earned tax free and withdrawals are tax free if they are used for a qualified education expense for K-12 or college. Parents or grandparents may also be able to tap into their regular IRA for education expenses without penalty in certain circumstances. Learn more at this link.

There are a number of tax credits and deductions available for qualified education expenses. The American Opportunity Credit and Lifetime Learning Credit are two programs that can offset out of pocket education expenses. To learn more about federal education tax credits, visit the IRS and click this link.

Start planning now to find ways to cut tuition expenses. This page on the federal student aid website discusses 30 ways to reduce college costs.

You may also be interested in viewing federal student aid available http://www.fafsa.ed.gov/ and the Georgia HOPE Scholarship program https://secure.gacollege411.org/Home/_default.aspx

What ideas can you share about paying for college?

If you have a complaint about a private student loan, you can share your concerns with the Consumer Financial Protection Bureau at: http://www.consumerfinance.gov/blog/our-student-loan-complaint-system-is-open-for-business/

Comments

The opinions expressed below are those of their respective authors and do not necessarily represent those of this office.

olly olly commented on 3/31/2012

very useful post . thank you
Roger Bugbee Lebanon Ct commented on 12/6/2012

I run a blog http://www.rogerbugbee.com/blog and I certainly will address point why it is important to save for college. However I would suggest that no money be put into banks. Rental real estate would be a better investment in the long run. Gifting the money made or writing it off as you go along. In my opinion The Government should not tax any money for an education. Educated People are needed to run the country. The educational system in the U.S is flawed and the States are making it worse. Education can be had with out a degree. We an need an extensive rework of our educational systems