Mar 18, 2013 9:32 PM by Connie Tran, KSBY News
With college tuition costs on the rise across the country, it may leave some wondering, what is the best way to save money for higher education? One local financial investor suggests, instead of writing a check to help a college student, invest in them.
Andrew Millar, an Edward Jones financial advisor based out of Orcutt, said there is a complicated formula when it comes to college financial aid packages. Millar said a check from a grandparent could hinder a student's ability to get financial aid, because the student would have to declare that gift in their financial aid application.
Millar suggests opening a 529 college savings plan, an exclusive mutual fund investment.
"A big advantage to 529 accounts is that they grow income tax free, for federal taxes. And so, if you use that money for qualified college education or technical school or trade school, then you can deduct that money, or you don't have to declare that income on your income taxes," said Millar on Monday.
Millar stated that another advantage to grandparents opening a 529 account, is that grandma and grandpa are always in control of the money.
But Millar warned of risks to the 529. He said the investments are subject to market fluctuation.
For specific advice, or if you have questions, it is important you contact a financial advisor.
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