College Savings Plans

The fact that civilization has progressed down the ages can only be understood if education is used as a benchmark for judgment. In fact the importance of education can be assessed from the fact that in addition to food, clothing and shelter it has now become one of the basic needs of life and as recognition of this paradigm change education has been identified as one of the basic fundamental rights by the federal government.

Now that I have been able to successfully establish the importance of education, I will now come to the main topic that I intend to espouse upon. And that is college savings plans.

With each passing day the cost of a good and proper higher education is rising at such fast rate that we can scarcely believe it ourselves. In fact, I do not think I will be much mistaken if I state that higher education has now become one of the most expensive commodities, or rather services in the country. Hence saving assumes an important role.

There are various ways you can adopt for the higher education of your child. One of the ways of saving that is gradually becoming very popular throughout the country is the 529 plan which has been introduced by the federal government for the benefit of students who are interested in higher education. By the means of this plan you can deposit money, which will start accruing interest, and which you can withdraw when your ward is ready to step into the world of higher education. Tax exemptions are also granted in some cases. Service charges, which are levied in some cases, are not imposed by the government if the child continues his higher education in some institute which is located in that state only. Another similar plan is the concept of prepaid education. Under this scheme you can pay in lump sum or otherwise, and buy credits for your child for a few months or years at today's rate and your child will be given that education when he grows up without being charged anything extra, even if the cost of education has increased at that time. Besides this you can also go for the staid and standard options of mutual funds.

But whatever you do, make sure you plan and save for the higher education of your child. After all it is his or her life that hangs in balance.

529 Plans