Paying for college is one of the biggest financial challenges families face, and with tuition costs continuing to rise, it’s more important than ever to start planning early. Thankfully, there are a variety of financial tools and strategies that can help you prepare for future education expenses.
Whether you’re a parent, grandparent, or guardian, here’s how financial products can support your college planning journey.
Start With a College Savings Plan
One of the most popular and effective options is a 529 college savings plan. These state-sponsored plans allow your contributions to grow tax-deferred, and withdrawals that are used for qualified education expenses are tax-free.
Use the 529 plan for tuition, books, room and board, and even some K-12 expenses. These plans choose from a range of investment options, and contributions may qualify for state tax deductions in some areas. Remember, you can start small and increase contributions over time — even $50 per month adds up.
Consider Using Permanent Life Insurance
Permanent life insurance, such as Indexed Universal Life (IUL) or Whole Life Insurance, can offer a unique way to help fund future college expenses. These policies build cash value over time that you can borrow against, and withdrawals are often tax-deferred.
Another upside? You don’t lose money to market volatility like you might with direct investments, because these policies are indexed, meaning they’re protected against downturns in the market. Plus, your child’s education is still protected in case the unexpected happens to you.
While this isn’t a traditional college savings tool, but it provides flexibility and can complement other planning strategies.
Paying for college is one of the biggest financial challenges families face, and with tuition costs continuing to rise, it’s more important than ever to start planning early.
Explore Annuities as a Long-Term Strategy
If you’re planning far in advance, annuities can be a useful way to grow savings in a tax-deferred account, providing guaranteed income later. Some parents or grandparents use annuities as a way to support college costs during the child’s enrollment years.
- Deferred annuities can be timed to start payments when tuition bills begin.
- Some annuities include flexible payout options or riders that align with education expenses.
Involve a Financial Professional Early
College planning doesn’t have to be overwhelming. A financial professional can help you build a custom strategy that aligns with your goals, timeline, and comfort with risk. They’ll compare the best options and pick the one that’s right for you — whether it’s a 529 plan, life insurance, annuities, or all three. These professionals help you keep your overall financial plan on track while still preparing for college.
Financial professionals compare the best college funding options and help pick the one that’s right for you — whether it’s a 529 plan, life insurance, annuities, or all three.
Paying for college takes preparation, but the good news is that you don’t have to do it alone. With the right financial products in place and the help of a knowledgeable professional, you can create a smart strategy to fund your child’s education without sacrificing your own financial future.
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