What You Need to Know About Starting a College Fund
College can be an expensive venture, even with the aid of scholarships and grants. The average cost of college for the 2017–2018 school year was $20,770 for in-state tuition, and costs are rising gradually each year.
With that in mind, you should consider starting a college fund for your children now rather than later.
Starting a College Fund
There are different ways to save for college, and you can tailor your choice to your family’s needs. These are three popular options:
- Coverdell Education Savings Account (ESA): Contribute up to $2,000 a year for beneficiaries 18 and younger to this tax-deferred trust account. There is an income limit to qualify, and the beneficiary must use the money by the time they’re 30 years old.
- The Texas Tuition Promise Fund: Prepay either all or some of your child’s undergraduate tuition and required fees. Keep in mind: This only applies to two- and four-year public colleges or universities in Texas.
- Texas College Savings Plan: Contribute up to $370,000 per beneficiary through this state-sponsored, tax-advantaged 529 plan. The money can be used for most accredited institutions of higher education in the U.S. and abroad, including vocational and technical schools as well as medical and law schools. Students can also use these funds for expenses ranging from textbooks to certain room and board costs.
Covering Your College Kid
When it comes to financing your child’s education, don’t overlook your college student’s insurance needs. You’ll want to consider two specific insurance policies: auto and renters insurance, says Christy Henderson, a Texas Farm Bureau Insurance Agent based in Denton.
Auto insurance:
- Your student can stay on your Texas Farm Bureau Insurance auto policy as long as they’re considered part of your household. (This means their permanent address is the same as yours.)
- But if they can afford it, it’s a good move for students to take out their own auto insurance policy. This establishes a relationship with insurance and can help lower future rates, since longevity with a policy can help you build a higher insurance rating, Henderson says.
- Also, ask your Agent about an academic-achievement discount, which is available to most full-time students with at least a 3.0 GPA.
Renters Insurance:
- Heading to college often means living on your own for the first time. Whether your student is spreading their wings in a dorm room or a cute little house near campus, Henderson advises purchasing a renters insurance policy.
- If your child is moving in with more than one person, it’s still wise to purchase an individual renters insurance policy. “Many apartment complexes require renters insurance, but they don’t always require all of the occupants’ names to be on the policy,” Henderson says. Should something happen, your student’s clothes, television and laptop won’t be covered if their name isn’t on the policy.
Make sure your college student is covered. Schedule a 360 Review with your Texas Farm Bureau Insurance Agent today, and learn more about getting your kids on the path to higher education.
Coverage and discounts are subject to qualifications and policy terms and may vary by situation. © 2019 Texas Farm Bureau Insurance
