Federal and state financial aid for college students may be shrinking but tuition costs continue to rise at 4
percent to 6 percent a year, according to the College Board, a nonprofit representing colleges and
universities. Based on the College Board’s 2007-2008 tuition report, the price of attending a private
university for 4.5 years has reached nearly $103,500. If college costs continue to rise at the current rate,
in 10 years that number will be over $200,000.

With Americans marrying later in life and waiting to have children, parents may be facing college costs
while simultaneously planning for retirement. That makes starting on college savings early even more
important to your future as well as your child’s – especially considering adults with college degrees make
an average of $1 million more than those without during their lifetime.

Regardless of your child’s age or the number of children you have, you do have options for investing for
college costs. Your financial planner can help you evaluate different strategies and select those that best
meet your goals for paying for college.

Scholarships, Grants and Aid
Financial aid can include loans, scholarships, grants and work study programs.
Even if your student isn’t in the top level of his or her class, opportunities may
be available for financial aid. A student can be awarded grants or
scholarships based on financial need, academic standing, extra-curricular
activities and civic involvement. Makes sure to always fill out financial aid
papers to qualify, even if you believe your income is too high to receive aid.

529’s
These plans, available in most states, allow you to make contributions to an
investment account in the name of the child and then make tax-free withdrawals
for educational expenses. Plans and investment options vary widely, so you
may want to consult your financial planner for more information.

IRA Withdrawals
If a 529 doesn’t sound appealing, you can make penalty-free IRA withdrawals
from an existing IRA account for any educational costs. However, there are
contribution and withdrawal limits, and not everyone can qualify for an IRA.
Withdrawals also reduce the assets growing tax-deferred in the IRA and could
seriously impact your retirement goals.

Coverdell Accounts
If you have grandparents who wish to contribute to an account, you may wish
to think about a Coverdell Savings Account. These types of accounts allow
anyone with an income of less than $110,000 a year, single or $220,000,
joint, to make yearly contributions of up to $2000 in an account that has a
variety of investment options. Once the student turns 18, they have until their
30th birthday to withdraw the money for educational use.

Creating “tax scholarships”
If you have grandparents who wish to contribute to an account, you may want to
consider a Coverdell Savings Account. These types of accounts allow anyone
with an income of less than $110,000 a year single or $220,000 joint, to make
yearly contributions of up to $2,000 in an account that has a variety of
investment options. Once the student turns 18, they have until their 30th
birthday to withdraw the money for educational use.

                              Planning for college can be overwhelming.  The variety of options and plans
                              available is enough to make anyone crazy.  That’s why it’s important to always
                              consult with your financial planner before making any long term decisions.  By
                              teaming up with your planner, you may be able to send your child to college with
                              the confidence and knowledge that your future, and your child’s future, is
                              financially secure.

Creating “Tax Scholarships”
A tax scholarship is a financial technique that creates money by shifting assets to your child over several
years and taking advantage of the child’s lower tax bracket. These tax savings can add up quickly and
can mean possibly thousands of dollars in extra money that can be used for higher education expenses.
Ask your financial and tax professionals for more information on how to take advantage of shifting assets
to children.

The variety of options and plans available for college planning can be overwhelming. Your financial
professional can help you explore every avenue for sending your child to college without the burden of
large loans or the loss of your retirement funds.

This article was submitted by Robert Valentine of Financial and Retirement Management.Robert Valentine is a well-known expert in the matters concerning investors. His articles on financial planning matters that concern investors have been published by several publications throughout the United States.