Financial Advisor Bend Oregon

Education Planning

Plan smart for a brighter future.

If college is in your family’s future, start saving early and choose your approach wisely.

If you want to help your children or grandchildren afford college and spare them a future of crippling student debt, talk to your advisor about education planning. For many families, education planning is a crucial piece of your larger financial plan, and ensures a bright future for generations to come.

Education trends prove how important education planning is for today’s families. College tuition costs have continued to outpace inflation since the 1980s. The exponential rise in tuition has made college less affordable for even middle to upper-income families. For kids born today, they can expect their college education to cost triple what it does right now. Our nation is already experiencing a student debt crisis, with borrowers carrying more student debt than ever before. (In 2020, the average college graduate owed more than $35,000 in student loans.) Heavy student debt has robbed young people of their ability to save for retirement, purchase a house, or gain financial traction.

You can put your kids (and their kids) on firm financial footing by planning for their education now.

Find the best way to save for college.

There are myriad ways to save for college—from traditional savings vehicles to tax advantaged plans specifically designed to boost college savings. As with any savings goal, we craft a strategy that takes your unique situation into account. We’ll recommend a savings plan or other investments based on your time horizon, tolerance for risk, preferred investments and tax situation We’ll also evaluate options that most favorably impact your student’s eligibility for financial aid.

Traditional Savings

You can opt to use traditional savings methods such as savings accounts (CDs, money market funds), tax-free municipal bonds, U.S. Treasury securities, or mutual funds. Traditional savings accounts are not tax-advantaged, but this approach does have its benefits—namely, there are no tax penalties if you end up using these funds for something other than college expenses.

Tax-Advantaged Plans

Tax-advantaged plans offer a major incentive for families to start saving early for college. Different plans are subject to different tax rules, and choosing the best plan for your family can be complicated. A qualified financial professional (like any of our Ascent financial guides), can help you choose the best option for your situation.

Find the best way to save for college.

There are myriad ways to save for college—from traditional savings vehicles to tax advantaged plans specifically designed to boost college savings. As with any savings goal, we craft a strategy that takes your unique situation into account. We’ll recommend a savings plan or other investments based on your time horizon, tolerance for risk, preferred investments and tax situation We’ll also evaluate options that most favorably impact your student’s eligibility for financial aid.

Traditional Savings

You can opt to use traditional savings methods such as savings accounts (CDs, money market funds), tax-free municipal bonds, U.S. Treasury securities, or mutual funds. Traditional savings accounts are not tax-advantaged, but this approach does have its benefits—namely, there are no tax penalties if you end up using these funds for something other than college expenses.

Tax-Advantaged Plans

Tax-advantaged plans offer a major incentive for families to start saving early for college. Different plans are subject to different tax rules, and choosing the best plan for your family can be complicated. A qualified financial professional (like any of our Ascent financial guides), can help you choose the best option for your situation.

529 Qualified Tuition Plans

Also known as College Savings Plans, 529 plans let you build savings for college thanks to tax incentives provided through the federal tax code. 529 plans work similarly to a ROTH IRA. Your contributions to a 529 plan are tax deductible in some states (including Oregon), subject to thresholds. The total accumulation of wealth in a 529 plan is not subject to taxes, as long as your student uses those funds for tuition and other qualified college expenses. There is no cap on contributions to a 529 plan, although the IRS considers contributions completed gifts.

Some states also offer tax incentives as part of their 529 plan. In Oregon, for example, offers a small tax credit (in 2020, up to $300 for joint filers) if your contributions meet a specified threshold based on your adjusted gross income.

Every state in the U.S. offers at least one 529 plan option, and these plans can vary widely in their fees, plan performance, and policies. Many 529 College Savings Plans offer a choice of investments including mutual funds, money market funds and fixed investment. Plans are often structured as static (meaning the portfolio mix and level of risk stays the same regardless of the student’s age) or targeted. A targeted plan is based on the student’s college enrollment year, and gradually shifts to lower-risk investments as college draws near.

Some colleges and universities also offer a type of 529 plan called a pre-paid tuition plan. Pre-paid plans let you purchase units or credits at participating educational institutions. Some plans only apply to tuition, while others also apply to living expenses. Participating in a school’s prepaid tuition program does not guarantee your student will be accepted into that school.

Coverdell Education Savings Plan

These tax-advantaged plans offer a few added benefits over 529 plans. For investors who like total control, Coverdell Plans give you the ability to self-direct your investments. (With 529 plans, you’re stuck with your plan’s investment portfolio.) Coverdell Plans are also more flexible with K-12 expenses. While 529 plans are limited on their use to cover K-12 education costs, Coverdell plans can be used for tuition plus other qualified expenses. On the downside, Coverdell Plans limit contributions to $2000 per year, and phase out participation at higher income brackets.

U.S. Savings Bonds

Savings bonds can be a useful tool for funding college. You can exclude interest earned from EE and Series 1 savings bonds from your income if you use the interest to pay for qualified education expenses or contribute to a 529 qualified tuition program.

Financial Aid

Decisions you make now can have consequences down the road when your student applies for financial aid. We can identify opportunities to boost your student’s eligibility, such as sheltering assets on the FAFSA, structuring trusts to reduce a student’s reportable assets, and lowering your reportable income by adjusting the timing of investment disbursements.

Rely on the experts.

You should always consult with a financial advisor before adopting a savings strategy or investing in a college savings plan. Ascent’s financial guides can help you choose the right college investment option to meet your goals, timeline, and tolerance for risk. With a smart plan in place, you can create a bright future for generations to come.

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