Saving For College, By The Numbers
Across the country, families dream of sending their children off to college. With college tuitions and fees skyrocketing, however, the prospect of funding a child’s education can be daunting. With proper planning and sound financial strategies, paying for college doesn’t have to be as intimidating as it may seem.
Synergistic Life Services is a full-service financial firm in the greater Chicago metro area. We have helped thousands of families lay the groundwork for their financial futures, including strategies to set money aside for college tuition. In this guide, we’ll show you how Synergistic’s team of financial architects can help you find the right solution for your child’s educational needs.
Understanding the Family’s Role in Paying for College
Whenever one applies for college tuition assistance programs, including loans, grants, and work-study opportunities, the family of each applicant is responsible for their share of the expenses. This is referred to as the Expected Family Contribution, or EFC. Lending institutions calculate the EFC from a number of factors, including adjusted gross annual income and assets owned by the family as well as any expected financial aid the family/student is expected to receive.
Based on these factors, the Total Expected Family Contribution from parents is:
0%-47% of Adjusted Gross Income
0%-5.6% of non-retirement assets, including 529 college savings plans and brokerage accounts/mutual funds.
From the student, EFC is:
50% of income if over $6310
20% of all assets, including savings accounts and UGMA/UTMA custodial accounts.
Synergistic Life Services College Planning Services
With the help of the financial planning experts at Synergistic Life Services, families no longer have to worry about saving for college expenses. In fact, our financial services are so unique in the industry that we have developed an entirely new category of professional: the financial architect. Our team strives to create long-term relationships with each client, and that means addressing any concerns our clients may have as they invest for the future.
The first part of college planning is to determine what sort of educational experience our clients’ children may want. Costs vary between private and public learning institutions, and the plans to save for these costs will also vary. We also provide insightful information about college inflation rates, which can affect the cost-per-year for tuition expenses and fees.
Next, we guide our clients toward several different college savings plans. These can include:
Custodial accounts such as Uniform Transfers to Minors Act (UTMA) and Uniform Gift to Minors Act (UGMA) accounts.
Traditional or Roth IRAs, which both allow for penalty-free distributions for eligible educational expenses (tuitions and fees).
529 College Savings Plans, which are popular options that can help cover expenses while providing significant tax and contribution advantages.
Coverdell Education Savings Accounts (CESA), which limits contributions to $2000 per year but offers tax benefits and can be used to supplement other college savings accounts to pay for tuition.
Traditional investments, such as brokerage accounts, mutual funds, and stock/bond purchases, each of which may be used to help fill in the gaps or shortfalls in other savings plans.
With our guidance, your child’s educational future is sure to be rewarding. Synergistic Life Services specializes in providing custom-tailored financial services, each meeting the unique needs and goals of each client we work with. To learn more about our college savings planning services, call our financial team today or visit our financial presentation library.
