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College Savings Strategies

With the rapidly increasing tuition costs each year, developing a strategic college savings plan is essential. Working with a financial planner to evaluate all options, develop a strategy and maximize tax benefits should help accomplish your key goals and objectives.


paying for education

Balancing the cost of raising a family, saving for your own retirement and saving for your children’s college education can be a daunting task. Our expert advisors work to build a college savings plan in which we focus on the best and most efficient way to allocate your savings over the years leading up to your child’s college enrollment.

Planners can assist parents in establishing a systematic college savings plan and properly investing the funds according to the child’s age, and other assets. Generally, an asset allocation focusing more on equities may be utilized given a longer time frame before college expenses are expected to begin. As college expenses grow nearer, the equity allocation can be reduced and more fixed income assets utilized to reduce risk.

At HFA, we believe early planning for college should be an integrated aspect of your customized financial plan. We work with our clients to evaluate all options for higher education savings, and then develop and implement college savings strategies that maximize tax benefits and help them reach their goals for educational funding.The following plans are generally considered for our clients:

529 College Savings Plan

529 college savings plans are by far the most widely used vehicle for college savings. Anyone can be an owner and or beneficiary of a 529 college savings plan as there are no income restrictions or limiting low contribution limits. One of the biggest benefits of this type of plan is the flexibility to change the beneficiary to any other member of the family, as well as the flexibility to allow contributions from any number of family members or beneficiaries. 529 college savings plans also have tax-deferred growth, tax-free withdrawals, and potential state-tax deductions for contributors.

Coverdell ESAs

ESA is a unique savings plan in that it allows you to use the funds saved for non-secondary education (private elementary and or high schools). One limitation of Coverdell ESAs is the $2,000 annual contribution limit, and a lower married income limit.

UTMA/UGMA

This type of college savings plan has been around for a long time. At one time, UTMAs and UGMAs were the primary vehicles used when saving for or in partnership with children for college. One of the main drawbacks for the custodian, typically a parent, is that funds become the child’s money without usage restrictions when he or she reaches the age of majority.

Brokerage Accounts

Brokerage accounts as college savings plans can be useful for high-net worth individuals that have already fully funded a 529 College Savings Account. However, outside of max-funding a 529 college savings plan, these accounts are far less tax-efficient to be considered as a primary savings vehicle for college education.

While it is challenging to address all of your savings goals for college, having a sound financial plan, solid college savings strategies, disciplined savings habits, and a trusted partner in HFA provides your family the best chance for success.

The Moral of the Story: It’s never too early to develop a college savings plan.


The case studies presented are hypothetical in nature and intended for illustrative purposes only to demonstrate the range and scope of services that are provided by HFA to its clients. Individual advice and results will vary based on each client’s circumstances, objectives and prevailing economic conditions.

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