How to save for the future with the student savings account?

College education is an expensive affair and unless one makes a saving earlier on, paying for a college going child is not going to be easy.  Most parents will certainly have this at the back of their minds but the whole thing is quite tricky.  The expenses will only go up each year and by the time the child reaches college-going age even parents are unsure as to how much they will have to shell out for their child’s education.

The best option then is the student savings account.  This is an account where the money is invested in the account and there is a special plan called the 529 Education Plans where one can save a lot of money for their child’s education without being penalized for it.

As per this plan which comes under Section 529 (Internal Revenue Service) the plan offers savings that are tax advantaged for both parents as well as students.  Here any U.S. citizen can open the account and save money for educational expenses without being taxed or penalized by the government.  Most banks offer great returns on these accounts and thereby allowing the account holders to earn thousands of dollars on the money that is safely kept in the bank.  This makes college more affordable than one would ever imagine.

A 529 Plan is a safe education savings plan for students and is operated by the states as well as the educational institutions.  This is designed to encourage families to set aside funds for their child’s education.  The 529 plans could be used in all colleges nationwide.  The funds from this plan could be used in any state of the student’s choice.  Almost all states have a 529 plan in place but the plans can vary from one state to another.

The plan is expected to satisfy a few basic requirements and thereby will be protected by federal laws where there would be tax benefits also.  There are basically two categories of the 529 plans.  One is the savings plan and the other the prepaid plan.  In the savings plan the investment is made in mutual funds and in prepaid plans one can pay part or all of the educational costs in advance.

By opening a student savings account parents are virtually stress free and are able to write a check to pay for the tuition, boarding etc without thinking twice.  These are the best options for parents as well as students.