For Your Family
Saving for College
April 19, 2010 (WLS) -- These are the best options to save for college and not have to pay the sticker price for tuition.
At many public schools, the total cost of a four-year education is now close to $80,000. According to recent government figures, tuition has been rising at a rate 10 times faster than the median family income since 1979. So what is the best option to save for college? What if you're starting late when your child is older?
Let's break this down by age. If you're starting early, you just had a baby, there are couple of good options, first the education savings accounts with banks or mutual fund companies, how does that work, what are the pros and cons?
Education savings accounts
- set up at mutual fund companies or banks
- stock mutual funds for newborns
- add fixed income investments for 3rd or 4th graders
- has a cap on contributions per year
529 prepaid tuition plan
- locks in tuition at in-state public colleges at current prices
- state income tax deductions up to $10,000/year
529 savings plan
- called "bright start" in illinois
- more flexible but no guarantees (stock market driven)
- you choose an investment portfolio
If your child is in high school:
- invest more conservatively
- can still contribute to a 529 plan to earn tax deduction
- be careful not to increase taxable income which can impact child's eligibility for aid
Throughout this week, there is a huge initiative going on in the Chicago area called Money Smart Week. Many public and private entities are coming together to offer free class on financial literacy including saving for college.
University of Illinois Extension, Tax Breaks for Higher Education
FinAid: The Smart Student Guide to Financial Aid
IRS Publication 970, Tax Benefits for Education
Illinois prepaid tuition program, College Illinois!
Illinois college tuition savings program, Bright Start
for your family
- Freezing rain, snow spreads across NW suburbs 10 min ago
- Boy, 11, killed after carjacker crashes into SUV 20 min ago
- Video: ABC 7 Chicago Weather App
- ABC7 Weather Forecast 4 min ago
- Off-duty sheriff's officer dies in Bellwood shooting
- Flossmoor boy, 15, charged with murdering older brother
- Albany Park youth orchestra broadens students' horizons
- 400 tuba players perform at Palmer House Hilton 56 min ago
- Families of murdered children gather at St. Sabina 56 min ago
- Holiday posada offers health insurance help in Pilsen 54 min ago
- Funeral held for teacher killed in Indiana roadside crash
- Bruce Rauner wins Cook County GOP endorsement
- hAPPy Holidays from ABC7 Chicago
- abcnews: 4 Arrested in Deadly NJ Mall Carjacking
- ABC7 Weather Forecast
4 min ago
- Freezing rain, snow spreads across NW suburbs
10 min ago
- Boy, 11, killed after carjacker crashes...
20 min ago
Most Viewed StoriesMost Viewed Photos