Never Too Early to Start an Education Savings Plan

The State of Michigan, and especially the mid-Michigan area, has wonderful education opportunities for our families, in both secondary and higher education. After having sent two children to Michigan State University for their undergraduate degrees and one on to the University of Michigan for a law degree, I thought that the stage of my life where planning for college was over. Last week, a wonderful thing happened to our family: I became a grandparent for the first time. My thoughts shifted as I prepared to write this article. My first thought was that we are very blessed with so many great education choices in the mid-Michigan area.

As a Certified Public Accountant, I have worked with educational organizations, school districts and colleges for 35 years. I have seen how these entities work from the financial side. I have learned over the years to never underestimate what a child is capable of. When parents value education and take an active interest in their children’s education, amazing things can happen. Parents’ involvement will not show up on any financial charts, but is a key ingredient to children’s success, in my opinion. As grandparents, we can also play a supporting role in a child’s education. When we were preparing for the birth of our granddaughter, we started pulling out books we had saved from when our children were young and now our granddaughter has a start on her own library.

It’s never too early to start planning for a child’s education, whether it is daycare, preschool, elementary, middle school, vocational school or college. Too often, I hear clients tell me they did not know all the details that go into a plan for education, so they get weighed down by the details and never get started. I say starting a pretty good plan is much better than never starting to plan
at all.

Let me give you a few facts

No matter how little you save, every cent makes a difference in affording your child’s higher education. Develop realistic savings goals and save regularly by placing aside a set amount at a set time. For example, if you save $7 per week (a dollar a day) in an account that earns 5 percent interest, you will accrue more than $9,600 at the end of 17 years. This shows that starting to save early is a good idea.

Let’s assume the university you are thinking of sending your child to presently costs approximately $23,000 for all items for a year. This cost, with a rate of inflation of 3 percent in 18 years for four years of college, will be over $163,000. So you can see that a dollar a day is not enough, but starting early and saving now will be in your best interest in the long run.

There are different approaches to saving for college, such as pre-paid tuition plans offered by various states, commonly referred to as 529 Plans. To look into these plans, you can go to www.collegesavings.org. There are also numerous financial aid programs and academic scholarships available to students. Others believe they are better off investing on their own.

Other options

Many of our area Intermediate School Districts offer a variety of training in fields that do not require a formal college degree. Many students excel in these areas and college may not be for every student. I have seen many students go through these programs and go on to start and run their own successful businesses.

We are also very fortunate to have a world class community college in Lansing, Lansing Community College. I started my college education at a community college. This is where I received education in writing, public speaking and my first business class, from where I believe to this day were some of the best instructors I ever had. Not only is the education great, the cost compared to starting at a four year school is significantly less. This helped me greatly in paying for my college education.

Piling up a mountain of school debt is not a badge of honor, however, for some it is the only way they can attend the college of their choice. Keep in mind the end goal. Formulate your plan and how much you are willing to pay for the opportunity.

In summary, here are my thoughts:

  • Be active and positive as a parent/grandparent•
  • Discuss education, but as a grandparent, keep in mind that parents have the final say
  • Start a savings plan for education early; as soon as possible
  • Work with an investment advisor to invest wisely and save on taxes
  • Investigate the various 529 savings plans
  • Make sure education is a positive thing and teach the joy of reading at an early age
  • Understand that there is no perfect plan, but a good plan is realistic
  • It’s a great start to graduate from college debt free
  • I’m going to have the time of my life as a grandparent!
  • So, if you have a chance, get involved, formulate a plan and remember it’s never too late to start planning to pay for a child’s education.
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