What are some of the options you’ve had in the past?
Notes:
In addition to bank accounts and CDs, you can save through Education IRAs, custodial accounts and even through your life insurance policy.
Education IRAs are a great idea, but the problem is their low contribution limits. Currently, you can only put in $500 a year—not nearly enough to make a dent in that tuition bill. There are also income limits to be eligible to open an Ed IRA.
How about custodial accounts? (pause for responses) The problem is that when your child turns 18, he or she assumes ownership of the assets and is legally entitled to use it however he or she wants—maybe for college... but maybe not.
Some parents have gone the route of tapping into the cash value of their life insurance policy for college funds. But is that really a smart choice? That insurance is there for a reason. It’s probably not wise to chip away at your coverage.