College Saving Plan Essay Example | Topics and Well Written Essays - 2250 words

College Saving Plan - Essay Example As the paper highlights, it is assumed that Wally who is 17 years old will join college at 18 years and this means that he only have one year to join college. He will also attend college for four years and full time basis. Since there are only four years, the parent will pay 100% of all the projected college costs and wish to meet all the savings goals by the time he completes the studies. The parents will make a monthly contribution towards their son’s college savings. The cost of college education is expected to increase by 3% annual which is the inflation rate. The couple also expects to earn a 9.65% after tax every year in the college saving fund. The current college cost is $25,000 per year. Based on this analysis, 100% of the total college cost will be $107,728which then means a monthly contribution of $2,122. The couple wished to save for the college education of the two children. In this case, 529 plans can be used for the two children. The only difference between the saving for the two children is that the saving for Wally will start only a year to joining college while that of Theodore will start 14 years before he joins college-assuming that the two children will join college at the age of 18. The parents will also have to contribute less in terms of monthly pay for Theodore than for Wally. Based on the above assumptions, 100% of the total college costs for Theodore will be $158, 203 leading to a monthly contribution of $354 aimed at meeting this cost. Since Harvard and UMass-Boston are both based in Massachusetts State, the best 529 plan would be U.Fund College Investing Plan. Â  This saving plan is managed by Fidelity and offers five different individual fund portfolios to choose from with each portfolio corresponding to the age of the beneficiary. It does not require any state residency. With this plan which is based in Massachusetts State, then it means that the savings for the college of the two children will well placed as the finances will be paid to their colleges.