How do I pay for education?
It's never too early to start planning for a child's future college education. When you give yourself a head start, your money can help your child reach his or her education goals.
Helping to fund a child's education can cost tens of thousands of dollars. In fact, if college costs continue to rise over the years, the total cost of a four-year education would be well over $100,000 per child. (U.S College Board, 2008).
Begin saving early
If you begin to save money at the birth of your child, even a very small sum each month, you can accumulate a considerable amount over time. Both the federal and state governments have made it much easier to save for college.
Most colleges expect parents and students to contribute their share. Typical financial aid packages also rely on government subsidized Federal Student Aid grants and loans and college payment plans. You can subsidize these plans with other funding options such as:
Section 529 Plans
A Section 529 plan is a tax-advantaged account used to save for the college education of a child, grandchild or other dependent. Section 529 plans are run by state governments (and some private colleges) and include college savings plans and prepaid-tuition plans. Investors contribute to an account that is managed by the investment board or treasury of the state in which the account is opened. Tax laws for contributions and distributions vary from state to state, but these plans allow for tax-deferred growth. Funds taken from a Section 529 plan to pay for qualified higher education expenses are tax-exempt.
Coverdell (ESA)
A Coverdell education savings account, formerly called an education IRA, is a tax-advantaged account that allows you to make after-tax contributions to pay for college tuition and qualified educational expenses. In 2008, you can contribute up to $2,000 a year per child under age 18 for contributors with modified adjusted gross income of $190,000 if filing jointly or $95,000 for single filer. These funds can be used to pay for educational expenses, including those for primary and secondary schools. Withdrawals are tax-exempt up to the amount of qualified expenses. The amount you can contribute to a Coverdell ESA is phased out at higher incomes. For single persons, the phase-out begins when modified adjusted gross income reaches $95,000. Allowable contributions phase out at $110,000. For married persons filing a joint return, the phase-out limits are exactly twice as much in 2008Earnings are tax-free if used for eligible education expenses, which include room and board, tuition, books, supplies and equipment, academic tutoring, and special needs services.
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Must use funds by the time the beneficiary reaches age 30
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Account can be transferred to another relative of the beneficiary
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Adults other than parents can make contributions
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Can be used for elementary, secondary and higher education
Life Insurance
Our Royal Legacy Life Insurance gives ultimate security to you and your family. Coverage throughout your life, Royal Legacy also guarantees a cash value accessible to you through emergency loans. You can access the accumulated cash value of your policy to help fund your child's education.
Scholarship
Did you know that Royal Neighbors beneficial members, or those who hold a certificate or annuity in their names, are eligible for a scholarship? We offer scholarships for high school seniors and older students returning to school after spending some time in the workforce.
