How to Fund your Family’s Education

May 7, 2016 | By Steven DiGregorio

Funding Education

Funding Your Family’s Education


Sooner than later, college tuition will loom large for most families, the time to start planning is now.


There are several ways to plan for your loved one’s education, and strategies to help them fund their education as well:

College Saving Plans


No matter what plan you select, there are some important questions you should get answers to before going forward:
  • The level of investment risk and potential return
  • The cost of participating in the plan
  • The quality of the program materials
  • The ease of changing account beneficiaries or the account owner
  • Any age restrictions or limits on the types of education expenses covered
  • How to get out of the plan
529 College Plans

Many states offer a 529 college savings plan, also known as Qualified Tuition Programs (QTP). After-tax money is typically invested into the plan. Withdrawals are tax-free when withdrawn for qualified education expenses, such as college tuition and books.

Each state’s plan offers various investment options, varying annual fees, and operating costs. Contribution limits vary depending on state and marital status, so be sure to check with your advisor. If your child doesn’t end up going to college, you may face fees and tax penalties when withdrawing the funds, though you may be able to transfer the account to another beneficiary.

Prepaid College Tuition Plans

Prepaid plans let you start paying for portions of your child’s college tuition now. The possible benefit is that you are able to lock in current prices and protect from exponential tuition hikes that are likely in the future. Many states offer tax-advantaged prepaid tuition plans. Carefully review all your financial plans with your financial counselor before making any final decisions.

Coverdell Education Savings Account

A Coverdell ESA is generally tax-advantaged if the money is used to pay for educational expenses. This option, as is a 529 plan is viewed as your asset — not your child’s. Upon assessment of your child’s resources, typically this account will not impact on your child’s chance of getting federal assistance. Unlike a 529, Coverdell ESAs can be used to cover any educational expenses, including K-12 costs such as private school tuition. There are some limitations, best to assess your goals and then discuss the best way forward with your financial advisor.

UGMA and UTMA Custodial Accounts

Custodial accounts hold a minor’s financial gifts in a managed account until the child reaches adulthood. There are tax advantages to this option, but fewer than 529 plans and unlike other plans these accounts are considered your child’s asset, not yours. A custodial account will directly impact your child’s financial aid eligibility.  Once the child reaches age,  he or she can use the money for education or something else entirely.


Other Ways to Help Fund Education


Gift of College

Instead of giving toys for birthdays, holidays, or other occasions, ask loved ones to give a gift directly to your 529 college savings plan. This gift will make a more lasting impact on a child’s life.

LEAF College Savings

Leaf offers family and friends a way to give a monetary gift that can be transferred to any 529 college savings plan to be used toward your child’s education.


General Education Saving Tips


  • Start early: It isn’t always feasible, but your son or daughter can start putting some money away for college.
  • Keep big account balances in your name
  • Find more ways to save: Analyze your spending to see if there’s anything you can cut out to increase your savings. Finding ways to save and making cuts can really add up over time.
  • Automate your savings: Automatically deposit a portion of your paycheck into a 529 college account or any savings account for that matter.
  • Set your savings goals: Figure out how much you can save each month, and make goals.
  • Prioritize your finances: Pay off any credit cards or other high-interest debt. Establish an emergency fund for yourself, and save for retirement as well.

Funding your family’s education can be daunting, start planning today and then discuss with your financial advisor to map out a plan that’s best for now and down the road.


Please note that the content of this blog does not constitute tax advice and is only intended for the educational purpose of the reader.  Please consult your tax advisor for specifics regarding your circumstances.

For more information contact us at 845.563.0537 or

Steven M DiGregorio is President of Compass Asset Management Group, LLC and an Investment Advisor Representative with Spire Wealth Management, LLC a Federally Registered Investment Advisory Firm.  Securities offered through an affiliated company Spire Securities, LLC a Registered Broker/Dealer and member FINRA/SIPC.


About Compass Asset Management Group

Our boutique-style firm has an investment philosophy is both prudent and value driven. We combine research from the largest firms on Wall Street with three decades of market experience to provide strategic, tactical and dynamic investment management.  Compass Asset Management Group, LLC delivers personalized financial planning, estate planning and investment management advice in a private setting with a high degree of sensitivity to your concerns and objectives. Our goal is to exceed yours expectations by listening closely, understanding deeply and communicating well through frequent, personal consultations entirely focused on your financial goals.

Make the right choice with your financial future. Consult Compass Asset Management Group for advice & guidance that will change your life. Plan better to live better…Call Compass Asset Management Group.


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Kuchar, K. (July, 30, 2015). How to Save for Your Child’s College Education. The Simple Dollar.

Orman, S. Paying for College. Retrieved on January 17, 2016 from’d_education. Sue Orman Media, Inc.

Williams, G. (May 20, 2014). 5 Ways to Save for Your Child’s College Education. US News and World Report, Money.


Tags: 529 College Savings Plans, 529 plan, college, coverdell, coverdell plan, education, education planning, financial aid, higher education, qualified tuition program, ugma, utma

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STEVEN M DIGREGORIO is President of Compass Asset Management Group, LLC and an Investment Advisor Representative with Spire Wealth Management, LLC.
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