529 Plans Leaving Your Kid’s College Education Underfunded?
Within the past decade our economy went from being vibrant to a state of loss and economic turmoil. Many have seen their IRAs affected and still some have lost their homes but now people are also losing money to pay for their kid’s education. Nothing can be more disturbing to a parent that has saved up money in a 529 plan than to lose enough of it that they have to pay out of pocket for an education.
Price spikes in the education sector are also taking a toll on what students can afford. For the most part, you shouldn’t have a problem with paying for college is you’re smart with your money. The smart thing to do is to look at the 529 plans and the risk they potentially run. Many states differ in what they offer and what risk they run.
Until recently, they were thought to be a completely safe investment for the future. The Illinois state representative Durking said "It was highly recommended by investment professionals and people we knew, and with all of the uncertainty in the markets we thought it was a safe investment."
It’s always safe to assume you that you have a chance of losing a part of your 529 investment especially if you know there is a pretty high risk. With the market still in a stalled state you might need to be creative on how you will pay for college.
Many families have already started taking steps like sending their kids to community colleges to get rid of basic classes and then sending them off to the desired university.
But that’s not the only thing you can do to stay safe despite losing money a 529 plan. A student can also play a part in high school so that the debt they incur is reduced in the long run.
Whatever the situation may be, it’s always a good thing to find alternatives to funding a college education. For example, you can encourage you student to take what are called CLEP exams. These exams can be taken by anyone and are good to get credit for basic classes.
They typically cost about $77 dollars per test as compared to paying tuition. Another alternative is to get more serious about applying for scholarships. Many students depend too much on federal direct loans and private loans which can end up leaving them with a big bill by the time they graduate.