TOLEDO (WTOL) - It’s a parents dream for their kids to go to college, but that can be really expensive.
Student loan debt is at $1.6 trillion in the USA— your mortgage is the only household debt that’s straining the family budget more.
Sending one of your kids to Toledo or BGSU will cost you about $25,000 a year between tuition, fees and books. Housing, of course, takes up more than half that.
If you want to get started early on paying for college, Dave Sattler, a financial advisor says to get into what’s called the 529 plan.
“If I can save that money year after year in the state of Ohio or Michigan I get a state tax deduction going in, and every year that money grows tax deferred, coming out 18 years later for college or a college expense which is really broad the money comes out tax free,” Sattler said.
Ohio’s plan is called College Advantage. In Michigan, it’s the MESP or Michigan Early Savings Program.
Open the account for each child when they’re born and contribute money every month.
It’s just like your 401(k), only instead of retirement, it’s to pay for college.
“Another question I get is: I have three children. I have three girls that are spread apart: a 20-year-old and a 6-year-old. Child A gets a full ride or doesn’t go to college and that’s fine. What do I do with the money? I’m the parent. I own the account. I change the beneficiary of account the Child B, child C or to myself. Maybe I want to go to college. There’s no age limit,” Sattler said.
The beauty of the 529 is that you can open the account online.
Get this: Saving $100 monthly for 18 years at 7 percent interest gets you more $40,000.