A college education may be the key to a better job for most Americans, but saving for college is daunting.
College comes at an alarmingly high cost these days. Clearly, most families need a long-term savings plan if they hope to help their children avoid a mountain of student loan debt.
For nearly three in 10 households, the method of choice is a tax-advantaged 529 plan. But permanent life insurance, which has a tax-deferred savings component, is a possibility, too, as many insurance agents will eagerly tell you. Here's a look at both options for establishing college funds for kids.
A 529 Plan or Permanent Life: What Is Best For Us?
- 529 plans and permanent life insurance are two ways to create college funds for kids.
- A 529 plan allows you to save and invest on a tax-deferred basis, and withdrawals are tax-free if you use them for qualified educational expenses.
- Permanent life insurance policies include both a death benefit and a savings account. You can borrow against the savings portion to pay for college.