According to recent studies, more parents in the US are worried about how to afford sending their kids to college than they are worried about their own retirement. Our guest literally wrote the book on how to pay for college without piling up student debt, and we talk to him about his strategies.
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It’s Never Too Soon Or Too Late To Save For College
College is expensive and figuring out how to pay for it can be stressful for all involved. According to financial expert John Hupalo, utilizing savings plans can help keep the dream of a college education from becoming a nightmare.
Hupalo, co-author of the book “Plan and Finance Your Family’s College Dreams,” said he has heard horror stories about students who take on more debt than they really should.
“They hamstring themselves, they start out in life with this huge anchor around their legs and sometimes it goes right through to parents and even grandparents who have co-signed loans,” he said.
To help avoid large debt, Hupalo suggests taking a look at the 529 college saving plans created by Congress in 1996. These tax-advantaged plans are developed and administered by states. There are no enrollment fees, and anyone can open an account.
“They do a terrific job of providing a lot of flexibility, so they work really well,” Hupalo explained.
There are two such plans in Wisconsin: Edvest and Tomorrow’s Scholar. Information on both can be found online at 529.wi.gov. The minimum contribution is $25 and it can be made by anyone, grandparents, aunts, uncles, friends. It’s tax free as long as the savings are used for approved expenditures like tuition, books, and room and board.
Anyone in any state can buy any plan in any other state, Hupalo said. But it can be beneficial to utilized your state’s tax benefits that are often provided. A list of plans available can be found on the College Savings Plans Network webpage.
The 529 plans are well thought out and user friendly, Hupalo said: “It’s a very well-crafted program. I don’t often say kudos to the Congress but kudos on this one.”
Although he thinks the 529 plans are usually the best, there are other savings programs available. One of these is a Coverdell Education Savings Account. These can be set up if income is under $110,000. They are tax free and families can contribute up to $2,000 per year. Unlike the 529 plans, money in these accounts can be used for K-12 expenses as well as for college.
The United States savings bond program is still a popular choice as well, Hupalo said.
No matter how you decide to save for college, Hupalo said the important thing is to start now.
“Every dollar that’s saved is a dollar not borrowed,” he said.
Episode Credits
- Larry Miller Host
- Larry Meiller Host
- Jill Nadeau Producer
- John Hupalo Guest
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