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Don't Let College Costs Catch You by Surprise
It may seem premature to start a savings plan now for the college education of a newborn child or grandchild. But with tuition rates rising each year, it's never too early to start preparing for this important expense.
Tuition Costs
| Type of Institution | Projected 4-Year Tuition and Fees | |
|---|---|---|
| Today (Enrolling 2008) | In 18 Years (Enrolling 2026) | |
| Private college | $110,000 | $313,800 |
| Public/University (in-state resident) | $28,700 | $81,900 |
| Two years community college, plus two years private college | $63,300 | $180,800 |
(Based on average tuition and fees for 2007–2008 as reported by The College Board and assumed to increase 6 percent annually.) Source: savingforcollege.com | ||
3 Strategies to Help You Save
- 529 plans. These state-sponsored accounts let you use after-tax dollars, which grow tax-free. All states offer at least one 529 plan that you can invest in even if your child won't be attending college in that state. Plus, your child (the beneficiary) can't use the money for any purpose other than education because 529 plans are for higher education only. Grandparents can also set up a 529 for their grandkids or contribute toward an existing 529 established by the parents. Restrictions can vary by state, so be sure to read the fine print before setting up any account.
- Coverdell accounts. These plans are similar to 529 plans, but they carry more restrictions, including a $2,000/year contribution limit. These accounts have one edge over the 529, however, in that money taken out can be used to pay for any education levels from kindergarten to college.
- Charitable remainder trusts. If you want to help pay for your child's or grandchild's education and would also like to support our mission, you will be pleased to learn that a charitable remainder trust allows you to do both.
How it works. You give cash, securities or other appreciated property to the trust, which then pays you a fixed or variable amount each year depending on the type of trust you choose. The payments can last for your lifetime or a fixed period up to 20 years. You can use these funds to cover tuition costs. When the trust ends, the remainder passes to the University of Tennessee Foundation. You will receive an income tax deduction now for the amount that is projected to support our mission.
We're Here to Help
Contact Woodrow "Woody" M. Henderson at (865) 974-2326 or plannedgiving@tennessee.edu to learn more about how paying for education and supporting our work can be accomplished.
Copyright © The Stelter Company, All rights reserved.
The information on this website is not intended as legal or tax advice. For legal or tax advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes apply to federal taxes only. State income/estate taxes or state law may impact your results.
