Creating a College Fund

Creating a College Fund How To Create a College Fund It's never too early or too late to start a college fund. Whether it's an attempt to provide for your child or yourself, a college fund can help to provide money for a college education. Related Articles Free Info on How to Save Money for a Child's College Fund Free Info on How to Save Money for a Child's College Fund Create an Emergency Fund Create an Emergency Fund Emergency Funds for Single Moms Emergency Funds for Single Moms The first step is to determine when the person the fund is for will be going to college. If the date is very soon, don't be surprised if you're not able to fully fund the education - but keep in mind that anything is better than nothing. The second step is determining how much you want to have in the fund. This will vary depending on whether you're looking for a private or public education. The third step is to figure out what type of fund you will start. It may help to discuss this with a financial planner as he or she will be able to give you a better idea of the return on investment you'll be able to get in each account. The fourth step is to save! Make regular deposits into the account, and, if you can, give more at holidays and other special occasions. Depending on the account, you may be able to let others deposit money into the fund themselves. If not, you can always do it for them. Different Types of Funds There are three major kinds of college funds, each of which is outlined below. Section 529 Plans Section 529 Plans are based on tax codes. The rules used for these vary by state, so you will need to do further research in your state before you can tell if one is right for you. There are two types of 529 plans, college savings and pre-paid tuition. College Savings Plans These are savings accounts that are normally tax-deferred. In most cases, they allow maximum contributions of $100,000 to $250,000. The money is held by the account holder, and he or she controls the assets, so there's no need to worry about Junior taking the money to buy a new car. Pre-Paid Tuition Plans This is a chance to pre-pay college tuition. In some cases, the tuition may be paid all at once; in other cases, the payments are spread out, similar to a repayment of student loans, but paid in advance.