(Written by Rich, College Outreach Specialist)

During the Holiday season, many of you may still be wondering what gifts you can get for your children, grandchildren, or nieces and nephews. Joe College has an idea that you won’t find at any department store. Make an investment in their education!

One way you could do this is by setting up a 529 college savings account. The benefits of this account are that a 529 is tax-free, so long as it is eventually used for a qualifying educational expense. Another benefit is that you can set it up for anyone and change the beneficiary if you need to. So maybe you set up two accounts, but one child only goes to college for two years and doesn’t use all the money that is saved. Well, if this happens, you can just switch the beneficiary to another child who may need some additional funds.

Another benefit is that for financial aid (FAFSA) purposes, 529’s are only reported if the holder of the account is a parent. And even if the parent is the holder, often times tens of thousands of dollars are protected under asset protection provisions, and are not factored into the FAFSA calculation.

These plans can be set up much like retirement accounts, to help you take control of the risk of the investment.  With today’s current market conditions, it may not be a bad time to start investing in a special child’s educational future.  As always, we recommend consulting with a financial planner to find what the best savings strategy is for you and your family. You can find more info on 529’s here and more about NH's state sponsored plan here.

The importance of saving for college cannot be stressed enough, with the cost of college increasing by around 5% annually. The more you are able to start saving now, the less stress your family will have later. The kids may prefer fancy electronic games and snazzy new clothes now, but in the future, they will appreciate the importance of your investment!

Happy Holidays,

Rich