My good friend and financial coach Jon White, giving a new perspective on your money, shares 3 ways to pay for your child’s college education. It pays to plan ahead and either take advantage of tax-favored accounts (529 or ESA plans) or strengthen your household’s finances by becoming debt free and cash-flowing education as they go.
Option #1: 529 plans
- Each State administers their own 529 plan
- Different rules from state-to-state
- Have the ability to deduct from State taxes
- Limited to the choices they offer
Option #2: Coverdell Education Savings Accounts
- Also known as ESA
- Grows tax FREE!
- Limited to saving $2,000 a year
- Has many more options to chose from
Option #3: Cashflow
- Best accomplished when debt free
- Lose the opportunity of tax-advantaged savings