Quick primer on how to prepare and save for college. Full article is here.

529 plans

When discussing 529 plans, it is important to distinguish between prepaid and savings plans.

A 529 prepaid tuition plan, such as Washington’s GET (Guaranteed Education Tuition) program, allows you to buy future tuition “units” at current tuition prices.

Getting help from grandparents:

There has been talk of eliminating the FAFSA requirement for reporting cash support, which would eliminate the concern of cash support reducing financial support but reporting requirements have not changed as of this writing.

These contributions also can be part of an estate planning strategy.

Contributions to a 529 plan up to $16,000 per beneficiary qualify for annual gift tax exclusions.

Married grandparents can contribute up to $32,000 to a grandchild’s 529 or custodial account per year and it would not be included in their taxable estate.

Furthermore, the $16,000 gifted per grandparent will not count against their lifetime gift-tax exemption. Grandparents can actually contribute up to five years’ worth of the annual gift exclusion into a 529 in a single year but they need to file an extra form with their tax return if they choose to do so.

And my favorite part:

Get tactical

It is not a savings vehicle, but I’d be remiss to not include military service as a way of paying for college. Enlisting and using the GI Bill, attending a service academy, or joining ROTC are all excellent ways to serve your country, meet wonderful people and get an education.

Just remember that there are strings attached and military service is a serious commitment. Furthermore, if your parents or grandparents were kind enough to contribute to a custodial account as you were growing up, you can graduate debt-free with a handsome asset that will continue to grow.