Attending college today is more expensive than ever before. According to the Orlando Sentinel, a college graduate in Florida carries an average of $23,000 in student loan debt. If you're a parent preparing your student for a post-secondary education, you might be using a 529 savings plan as a tax-free strategy to pay for tuition and other expenses. You know that putting money aside for a child's education is worthwhile, but do you understand how to maximize your savings?
The advantages of an out-of-state 529 savings plan
Many parents choose to start a 529 savings plan in Florida due to convenience or lack of knowledge about the potential benefits of saving out of state. Like college tuition, whether you choose an in-state or out-of-state program can make a difference in costs. What should parents in Florida know about the benefits of saving out of state?
Florida has no state income tax, so there is no deduction available for in-state savings. According to financial experts, this means Florida residents have a greater incentive to find a 529 savings plan in another state that allows maximum savings for minimal fees.
Strategies for dealing with student loan debt
After your child graduates college, you have high hopes that they will find a good job and will meet their financial obligations. Unfortunately, according to Time, one in six student loan borrowers have not made a payment in nine months or more, putting them in default. How can parents help prevent their students from burdensome student loan debt?
Right now, 529 savings plans cannot be used to repay student loans, but a bill in the House of Representatives could change that. Because of this alarming default rate, parents should be aware of student loan repayment strategies to help guide their children after graduation.
Debt relief requires creative strategies
If your child is unable to afford their student loan payments, there are more options than just defaulting on the loan. Although student loans are not eligible for discharge via bankruptcy, borrowers can refinance their loans or seek an income-based repayment plan. Additionally, an attorney with knowledge of creative debt relief strategies can help borrowers who are struggling to make their payments.
Once the academic rigors of college end, the financial challenges begin. But, with knowledge of savings and debt repayment strategies, student loan borrowers can be better prepared to face them.