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Grandparents can help save for college tuition

February 23, 2012
Times Leader
By FRED CONNORS, For The Times Leader

Grandparents may want to start thinking now about how they can help pay for their grandchild’s college. Suzanne Hall, senior vice president of WesBanco Securities, said a solid financial college tuition plan should be in place for at least 15 years. Grandparents can start such a plan, or contribute to one already set up by their children. “A good plan initiated when a child is 3 years old should produce enough money for college when the child reaches the age of 18,” Hall said. She said trends indicate the cost of a four-year education in public or private colleges has nearly doubled since 2007 and they will likely double again over the next 10 years. According to Hall, a systematic investment plan typically produces more yield than a traditional savings account. As an example, she said a monthly investment of $50 — assuming the investment earned a hypothetical 8 percent rate of return — will produce $24,004 over an 18-year period while a typical savings deposit account will yield around $9,000. “People not familiar with investment strategies may want to find a financial counselor,” she said. “There will be an upfront fee, but the return will be worth it.” She said advantages in an investment plan are that it gives you a systematic and consistent savings and all gains are tax-free on the federal level if the money is used for higher education. Hall points to The Smart-529 plan offered by the West Virginia College Prepaid Tuition and Savings Program Board of Directors. “Parents or grandparents can name a specific child as beneficiary of the account and, if that child gets a financial scholarship or decides not to attend college, a second child can be added as beneficiary,” she said.

 
 

 

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