Viking Magazine - August 2021 - 11

a rarity, with the National Center of
Education Statistics reporting that
approximately 86% of fi rst-year
students at four-year degree-granting
postsecondary institutions are
awarded fi nancial aid. Many students
fi nd it more feasible to afford their
higher education with a combination
of savings, loans, and grants and
scholarships.
Ways to Save
When it comes to saving for college,
there isn't a one-size-fi ts-all approach.
In a 2018 Sallie Mae report that
surveyed parents with children under
the age of 18, six out of 10 parents
had saved an average of $18,135
for higher education, with a goal of
eventually hitting $55,342. Of those
putting money aside, three of the
most commonly cited college savings
vehicles were 529 plans (30%), general
savings accounts (22%) and investment
accounts (14%).
* 529 plans: Specifi cally designed to
help you create a higher education
fund, 529 plans are state-sponsored
savings accounts that can be used
for the benefi ciary's tuition, room
and board, books and student loan
repayments. Money can be deposited
and withdrawn free from taxes,
as long as it's used for qualifi ed
education expenses. Anyone over
the age of 18 can open a 529 plan,
and anyone of any age can be the
benefi ciary-even be the same person
who set up the account.
* General savings accounts: Just as
you would use a general savings
account to save for a car, home or
vacation, these accounts can be used
to stockpile money for college as well.
Unlike 529 plans, which are invested
in the stock market, savings accounts
earn a small amount of interest-at
presstime, it was 0.06%-on the
money deposited in the account. So,
while the returns may not be as high,
and you'll be taxed on the account's
growth, one of the biggest advantages
to saving for college with a general
savings account is the fl exibility, as
you aren't penalized if the money
doesn't go toward higher education.
* Investment accounts: Investing in the
stock market through mutual funds,
stocks and bonds has historically
yielded returns of 10% annually on
average (not accounting for infl ation).
Those high returns may sound
attractive when you're grappling with
the sticker shock of college tuition.
Though you'll be taxed on the capital
gains when you withdraw money
from the account, there's no limit to
what you can spend it on.
* Roth IRAs: You're likely familiar with
Roth IRAs as a retirement savings
vehicle, but they can be used to save
for college as well. Contributions
can be withdrawn at any time for
any reason, and the usual 10% early
withdrawal penalty is waived when
the funds are used for qualifi ed higher
education expenses.
* Life insurance: A permanent life
insurance policy can be leveraged to
offset the costs of college. Borrow
against the cash value of your policy.
If you don't pay the loan back, the
insurer will simply reduce the amount
of your death benefi t. Death benefi ts
can also be used to pay for college,
as long as you have passed away by
the time your benefi ciary enrolls in
school.
Figuring out how to pay for college
may seem daunting, but having a
savings plan in place can help you meet
your goals. According to Sallie Mae,
parents with a plan have double the
college savings-$22,169 compared to
non-planners' $9,208. Sit down with
your child to talk about prospective
schools, tuition and other expenses,
expected family contributions and
fi nancial aid. Being on the same page
will allow you to stress less about
paying for college and daydream more
about one day watching your son or
daughter walk across the graduation
stage in cap and gown, a hard-won
degree in hand.
THE COST OF
COLLEGE
Here's a look at last year's
average tuition and fees at
ranked colleges, according to
U.S. News & World Report.
$9,687
Public in-state
schools
$21,184
Public out-of-state
schools
$35,087
Private schools
Sons of Norway, 1455 West Lake Street,
Minneapolis, MN, offers fi nancial products,
but not all products are available in all states.
Products issued by Sons of Norway are
available to applicants who meet membership,
insurability and residency requirements.
sonsofnorway.com VIKING AUGUST 2021 11
http://www.sonsofnorway.com
Viking Magazine - August 2021

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