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Guest column: Choosing right plan for child’s college savings
by Mitch Seabaugh
Guest Columnist
April 04, 2013 05:25 PM | 6041 views | 0 0 comments | 16 16 recommendations | email to a friend | print
Mitch Seabaugh
Mitch Seabaugh
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When it comes to financial planning, fear of the unknown often paralyzes people into inaction. Unfortunately, it’s easy to turn a blind eye, but every day that passes is a missed opportunity.

With tax day lurking just around the corner, this is the perfect opportunity for Georgia families to look at their financial situation and take control of one of the most important elements of their finances — plans for their children’s college education.

Next to retirement planning, this is the single most important financial decision a family will ever make, and with a few simple steps, anyone can take hold of their financial future and invest for college. While every family’s situation is unique, here are some general guidelines to help get you started and maximize your college savings benefits: Plan for the worst, hope for the best.

While it may sound cliché, this is the best advice I can give families as they look at their financial strategy for college savings. You cannot assume your child will get a scholarship or be eligible to receive financial aid. In fact, parents should plan to pay for at least half to two-thirds of college costs through a combination of savings, current income, and loans.

So, create a college savings account for your child, and if he/she does receive other funding to help pay for school, you can use the savings for another family member or to pay for expenses that aren’t covered, such as room and board, books and supplies.

There is no harm in having money in a savings account, but not having any savings can be disastrous financially. Take control. You know your child should attend college, but where will they go? How much will it cost? Will they get a scholarship? There are numerous unknown factors that will greatly impact your college savings plan.

Instead of focusing on the unknowns, sit down and take control of what you do know. There are many ways you can save, so research your options, look at your finances and decide how much you can afford to save each month. Then, establish a plan of action, and follow it.

You should review your plan at least annually and make adjustments to your investments, contributions and overall savings strategy as needed. Look at the tax advantages. With tax time in full swing, there is no better time than now to think about how a college savings account can impact your taxes.

Opportunities for investment and saving can affect your tax filings, so do your research. The state of Georgia’s Path2College 529 Plan, for instance, offers Georgia residents who make a contribution to a Path2College 529 Plan before the April 15 tax deadline each year a state income tax deduction on contributions of up to $2,000 per year, per beneficiary, regardless of their annual income.

Please note that a transfer of funds from another state’s 529 plan is not eligible for the Georgia income tax deduction. Recapture provisions apply. Any earnings in the Path2College 529 Plan are also federal and Georgia income tax-deferred, withdrawals for qualified higher education are federal and Georgia income tax-free and contributions made to a Path2College account may reduce the taxable value of the account owner’s estate.

Share your strategy. No matter what route you choose in saving for your child’s future education, let family and friends know that you do have a college savings plan. Encourage them to contribute to this savings for holidays, birthdays and special occasions instead of or in addition to traditional gifts.

Every little bit will help, and often family and friends take pride in knowing that they are making an impact in your child’s future by helping you save for his/her education. It’s never too late to start. It’s no secret that time is your most valuable asset, and you should begin saving as early in your child’s life as possible.

However, if you have an older child, don’t think that it’s too late to make an impact. Whether you have 18 years or one year to save, every dollar saved today will help offset college expenses tomorrow.

Mitch Seabaugh is the director of Georgia’s Path2College 529 Plan, which was established to provide Georgia families with an easy-to-use and understand, tax-advantaged way to save for their children’s college education. For more information, visit www.Path2College529.com. Seabaugh can be reached at info@path2college529.com.
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