Five Tips to Help Families Pay for College

MINNEAPOLIS and ST. PAUL, Minn., Sept. 13, 2012 /PRNewswire/ -- Financially preparing for college in the face of rising high education costs can be a daunting task, but a sound savings strategy today can ease the strain of tomorrow's tuition costs.

"Exploring various options and planning early can make the cost for a college education much more tolerable," said Pete Schmidt, Vice President, Regional Sales Manager covering the Twin Cities for BMO Harris Financial Advisors, Inc., a part of BMO Financial Group. "Saving should be a priority as soon as possible because the decisions you make now will have a significant impact on how much money you have when your children are ready to head off to college."

Below are a few options to help families pay for college:

• Consider a 529 Plan: Designed to help families set aside funds for future college costs, a 529 Plan is an education savings plan operated by the state or an educational institution. 529 Plans can be used to help pay the costs of qualified higher education expenses at colleges nationwide. The federal tax law even provides special tax benefits to plan participants¹. A common strategy is to set up an automatic transfer out of a checking account to a 529 Plan account. This helps spread out the cost over a longer period of time.
• Set Up a Savings Account: Using cash for costs outside of tuition, such as books and a meal plan, will keep student loans and credit card debt down. Start a savings account specifically for these types of expenses.  The student can also participate by depositing a percentage of money from summer or weekend jobs and from monetary gifts into the account to give them a sense of ownership. It's never too early or too late to begin saving for a college education.
• Share your Plan with Others:  If grandparents, aunts and uncles, and other family members know about your college savings plans, they can help out.  They can deposit into a 529 Plan or savings account or buy Savings Bonds as birthday and holiday presents and help build up even more money to use toward college costs.
• Apply for Federal Student Aid Programs: Through the use of grants, work-study programs, and federal loans, there are a variety of resources available to help fund a college education. Eligibility is different for each program. For further information, visit www.ed.gov.
• Research Scholarship Opportunities: Scholarships are available to a variety of people through individual universities, county offices, privately held businesses, and nonprofit organizations. Your school's guidance counselor can be invaluable in providing information on local scholarship opportunities or scholarship information for specific colleges being considered, and a search of the Internet can provide additional resources for finding scholarship opportunities for a college education.

Perhaps your greatest asset in financially preparing for your children's college is to find a financial advisor who can help you determine which investment option may best fit your particular situation.  Said Dean Urbanski, Vice President, BMO Harris Financial Advisors, Inc., "Our financial advisors have financial planning tools that can provide real clarity into the expenses associated with attending college. We can provide a detailed report that can be customized to a specific college (public or private) or work with average tuition rates. These reports can include expense information on room & board, books, personal expenses, and tuition. In addition, based in part on inflation rates that have historically been associated with increases in college expenses, we can factor in and project to what level inflation rates may drive college tuition to at a future year, which is critical when planning over longer periods of time."

By sorting through the various options, it's possible to create a successful plan to prepare for college funding. To find a financial advisor near you, visit www.bmoharris.com/financialadvisors.

¹ Source:  http://www.sec.gov/investor/pubs/intro529.htm

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BMO Harris Financial Advisors, Inc., BMO Harris Bank N.A., and BMO Private Bank are affiliated companies within BMO Financial Group.

SOURCE BMO Harris Financial Advisors